[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



REGIONAL ENERGY RELIABILITY AND SECURITY: DOE AUTHORITY TO ENERGIZE THE 
                           CROSS SOUND CABLE

=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON ENERGY AND AIR QUALITY

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 19, 2004

                               __________

                           Serial No. 108-83

                               __________

       Printed for the use of the Committee on Energy and Commerce


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house


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                    ------------------------------  

                    COMMITTEE ON ENERGY AND COMMERCE

                      JOE BARTON, Texas, Chairman

W.J. ``BILLY'' TAUZIN, Louisiana     JOHN D. DINGELL, Michigan
RALPH M. HALL, Texas                   Ranking Member
MICHAEL BILIRAKIS, Florida           HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio                EDOLPHUS TOWNS, New York
JAMES C. GREENWOOD, Pennsylvania     FRANK PALLONE, Jr., New Jersey
CHRISTOPHER COX, California          SHERROD BROWN, Ohio
NATHAN DEAL, Georgia                 BART GORDON, Tennessee
RICHARD BURR, North Carolina         PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
CHARLIE NORWOOD, Georgia             ANNA G. ESHOO, California
BARBARA CUBIN, Wyoming               BART STUPAK, Michigan
JOHN SHIMKUS, Illinois               ELIOT L. ENGEL, New York
HEATHER WILSON, New Mexico           ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona             GENE GREEN, Texas
CHARLES W. ``CHIP'' PICKERING,       KAREN McCARTHY, Missouri
Mississippi, Vice Chairman           TED STRICKLAND, Ohio
VITO FOSSELLA, New York              DIANA DeGETTE, Colorado
STEVE BUYER, Indiana                 LOIS CAPPS, California
GEORGE RADANOVICH, California        MICHAEL F. DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire       CHRISTOPHER JOHN, Louisiana
JOSEPH R. PITTS, Pennsylvania        TOM ALLEN, Maine
MARY BONO, California                JIM DAVIS, Florida
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
LEE TERRY, Nebraska                  HILDA L. SOLIS, California
MIKE FERGUSON, New Jersey            CHARLES A. GONZALEZ, Texas
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. ``BUTCH'' OTTER, Idaho
JOHN SULLIVAN, Oklahoma

                      Bud Albright, Staff Director

                   James D. Barnette, General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

                 Subcommittee on Energy and Air Quality

                     RALPH M. HALL, Texas, Chairman

CHRISTOPHER COX, California          RICK BOUCHER, Virginia
RICHARD BURR, North Carolina           (Ranking Member)
ED WHITFIELD, Kentucky               TOM ALLEN, Maine
CHARLIE NORWOOD, Georgia             HENRY A. WAXMAN, California
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
  Vice Chairman                      FRANK PALLONE, Jr., New Jersey
HEATHER WILSON, New Mexico           SHERROD BROWN, Ohio
JOHN B. SHADEGG, Arizona             ALBERT R. WYNN, Maryland
CHARLES W. ``CHIP'' PICKERING,       GENE GREEN, Texas
Mississippi                          KAREN McCARTHY, Missouri
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
GEORGE RADANOVICH, California        LOIS CAPPS, California
MARY BONO, California                MIKE DOYLE, Pennsylvania
GREG WALDEN, Oregon                  CHRIS JOHN, Louisiana
MIKE ROGERS, Michigan                JIM DAVIS, Florida
DARRELL E. ISSA, California          JOHN D. DINGELL, Michigan,
C.L. ``BUTCH'' OTTER, Idaho            (Ex Officio)
JOHN SULLIVAN, Oklahoma
JOE BARTON, Texas,
  (Ex Officio)

                                  (ii)




                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Blumenthal, Richard, Attorney General, State of Connecticut..    45
    DeLauro, Hon. Rosa L., a Representative in Congress from the 
      State of Connecticut.......................................    19
    Donahue, Jeffrey A., Chairman and CEO, Cross-Sound Cable 
      Company, LLC...............................................    52
    Kessel, Richard, Chairman and CEO, Long Island Power 
      Authority..................................................    63
    King, Hon. Peter T., a Representative in Congress from the 
      State of New York..........................................    22
    Museler, William J., President and CEO, New York ISO.........    49
    Otis, Lee, General Counsel, U.S. Department of Energy........    42
    Schumer, Hon. Charles E., a United States Senator from the 
      State of New York..........................................     4
    Shays, Hon. Christopher, a Representative in Congress from 
      the State of Connecticut...................................    27
    Wood, Patrick, III, Chairman, Federal Energy Regulatory 
      Commission.................................................    38
Additional material submitted for the record:
    Ackerman, Hon. Gary L., a Representative in Congress from the 
      State of New York, prepared statement of...................    75
    Clinton, Hon. Hillary Rodham, a United States Senator from 
      the State of New York......................................    75
    McCarthy, Hon. Carolyn, a Representative in Congress from the 
      State of New York, prepared statement of...................    77
    Simmons, Hon. Rob, a Representative in Congress from the 
      State of Connecticut, prepared statement of................    76
    Spitzer, Eliot, New York State Attorney General, prepared 
      statement of...............................................    78

                                 (iii)

  

 
REGIONAL ENERGY RELIABILITY AND SECURITY: DOE AUTHORITY TO ENERGIZE THE 
                           CROSS SOUND CABLE

                              ----------                              


                        WEDNESDAY, MAY 19, 2004

                  House of Representatives,
                  Committee on Energy and Commerce,
                    Subcommittee on Energy and Air Quality,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room 2322, Rayburn House Office Building, Hon. Ralph Hall 
(chairman) presiding.
    Members present: Representatives Hall, Cox, Shimkus, 
Pickering, Radanovich, Rogers, Issa, Otter, Barton (ex 
officio), Boucher, Waxman, Green, and McCarthy.
    Staff present: Jason Bentley, majority counsel; Mark 
Menezes, majority counsel; Bob Rainey, fellow; Peter Kielty, 
legislative clerk; Sue Sheridan, minority counsel; Bruce 
Harris, minority professional staff member.
    Also present: Representatives Bishop of New York and 
Israel.
    Mr. Hall. It appears that the main ones are present, so we 
will get underway.
    Today's hearing is going to provide us with a very good 
example of our Nation's energy problems, and I think we need to 
pass the Comprehensive Energy Bill. It is about a dispute 
between two States with implications for regional reliability. 
The Cross Sound Cable is the first of its kind, merchant 
transmission project and approved by the Environmental and 
Siting Agencies of New York and Connecticut. It is approved by 
the U.S. Army Corps of Engineers. The Public Utility 
Commissions of both States found that the project would benefit 
the consumers in their State.
    When the project was unable to comply with its permits, the 
owners immediately contacted the appropriate agencies. While 
most of the agencies were willing to work and work together and 
try to work out the differences, Connecticut's response--and 
they made their decision to shut the project down. Not only did 
they shut it down completely, the State legislature imposed a 
moratorium preventing State agencies from issuing or modifying 
any new permits for energy projects in that area. They recently 
reissued the moratorium and apparently intend to keep doing so 
indefinitely.
    The result is that the Cross Sound Cable investors can't 
negotiate with the State to address their problems, and they 
can't get permits to do what's needed to comply with the 
original permit. They are really left with no recourse.
    So today, we will hear testimony on the benefits of the 
Cross Sound Cable and how it has been used over the past 6 
months.
    Following the blackout last August 14, Secretary of Energy 
used his emergency powers to order the cable put into 
operation. Testimony today will address how the cable was used 
to stabilize the grid in the northeast and how it can help 
relieve transmission congestion in New York and the New England 
RTO.
    When it is all said and done, I think we will see, once and 
for all, that the Cross Sound Cable will save money for 
consumers in both New York and Connecticut by improving 
reliability and reducing the delivered cost of electricity. 
Because of these benefits, we included a provision in the 
Comprehensive Energy Bill that now awaits two votes. We need 
two senatorial votes, just two.
    We could get them both from New York, perhaps, if we 
included a provision in the Comprehensive Energy Bill that 
resolves this dispute in favor of keeping the Cross Sound Cable 
in operation. It is my strong desire that the appropriate 
parties in Connecticut and New York--two great States--can come 
together to reach some kind of agreement.
    I fear however that Connecticut's just-say-no attitude to 
regional energy security and reliability is going to require an 
act of Congress to resolve. And that is kind of a shame, 
because we ought to get a business decision rather than a 
congressional decision.
    The reliability assessment for this summer indicates that 
the northeast should have sufficient generation capacity to 
meet the region's needs. However, the demand of growth will 
require significant new investment in the years to come, and 
the reality of transmission congestion may have significant 
effects on reliability and the cost of power this summer.
    Long Island is one of those congestion points identified, 
and the assessments were done under the assumption that the 
Cross Sound Cable would be operational. Since it is no longer 
in service, we can expect that supplies will be tighter than 
predicted this summer and congestion worse for the northeast.
    I hope this hearing today between two great States, two 
great areas, well-represented, will help kickstart the dialog 
between these two States to resolve their differences and 
realize that they both need all the power they can get.
    With that said, I look forward to hearing the testimony of 
our witnesses, great witnesses, and get a better understanding 
of just what some of Connecticut and New York's concerns are.
    We have Steve Israel and Tim Bishop, not members of this 
committee. We ask that they sit in and be given the rights of 
questioning the witnesses as other members of the committee.
    Is there objection?
    The Chair hears none. They are accepted.
    Without objection, the Chair is going to proceed pursuant 
to Committee Rule 4(e) and recognize members for 3 minutes for 
openings statements. If they differ, this time will be added to 
their opening round of questions.
    At this time, recognize the gentleman from Virginia.
    Mr. Boucher. Well, thank you very much, Mr. Chairman. And 
thank you for convening today's hearing. We will have an 
opportunity this morning to evaluate the role of the Cross 
Sound Cable in addressing the electricity needs of New York and 
Connecticut.
    The cable is a 330-megawatt undersea merchant transmission 
line connecting the regional transmission system in Connecticut 
with the New York Independent System Operator on Long Island. 
The line was buried beneath the Long Island Sound in 2002, 
although it was not activated at that time. Opponents of the 
cable, largely from Connecticut, raise environmental concerns 
such as the question of whether the line is buried deeply 
enough at certain points as it crosses Long Island Sound. 
Officials from Connecticut have additional objections stemming 
from concerns that the line would encourage power flows out of 
Connecticut, which itself is suffering from electricity 
transmission constraints.
    Supporters of the cable believe that its use would bolster 
transmission system reliability both in Connecticut and in New 
York and also help to meet a projected power shortage on Long 
Island during the course of this summer.
    Following the blackout last August, Secretary Abraham 
issued an emergency order activating the line to relieve 
electricity shortages on Long Island. Two weeks ago, on May 7, 
secretary Abraham declared an end to the emergency conditions 
that necessitated the lines use and accordingly rescinded the 
emergency order.
    At that time, the Secretary pointed to conclusions reached 
in the joint task force report on the blackout that operation 
of the Cross Sound Cable would not have prevented the spread of 
the blackout. The conference report on H.R. 6, the 
Comprehensive Energy Bill contains a provision that would have 
blocked the Department of Energy from terminating the order 
energizing the cable. That provision directed that the order 
remain in effect unless specifically rescinded by an act of 
Congress.
    Since the recission of the order, Senator Clinton and 
Representatives Tim Bishop and Steve Israel have introduced in 
the Senate and in the House legislation virtually identical to 
the provisions in H.R. 6 relating to the Cross Sound Cable. The 
bills introduced by the New York delegation would reverse the 
recission and keep the cable in operation under the emergency 
order unless Congress acts to reverse the order.
    We have with us sitting on our panel today Representatives 
Bishop and Israel, and I also want to extend a welcome to them.
    Today's hearing will give us an opportunity to learn about 
the power generation and transmission needs of New York, 
Connecticut and the New England region and the role that the 
Cross Sound Cable plays in addressing those needs.
    We also welcome the testimony from our distinguished 
colleagues, former Member of the House and Member of the 
Senate, Senator Schumer, and representatives in Congress from 
both New York and Connecticut.
    We also welcome testimony this morning from the chairman of 
the FERC, general counsel of the Department of Energy, the New 
York Independent System Operator, the Attorney General of the 
State of Connecticut and both the merchant company which 
operates the cable and the Long Island power authority. Mr. 
Chairman, it is a timely hearing, and I commend you for 
convening it, and I yield back.
    Mr. Hall. I thank you. And if there is no objection, 
Senator Schumer has other things that he has to do, and we will 
delay the opening statements, if you don't mind, until we hear 
from Senator Schumer.
    And I am sure he is going back over there and going to work 
on trying to pass that energy bill to where we won't even need 
this.
    Mr. Issa. Mr. Chairman, is that a commitment?
    Senator Schumer. All we need is two little changes, and we 
will be with you all the way.
    Mr. Hall. He is a highly respected former Member of the 
House and a great worker over in the Senate.
    Senator Schumer, we are pleased to recognize you. Thank 
you.

 STATEMENT OF HON. CHARLES E. SCHUMER, A UNITED STATES SENATOR 
                   FROM THE STATE OF NEW YORK

    Senator Schumer. Well, thank you Mr. Chairman. I want to 
thank your courtesy in inviting me to speak at this hearing and 
remember the days we were both Members of the class of 1980 
that came here in the Congress.
    Mr. Hall. You have done well, and I have gone wrong.
    Senator Schumer. You have done pretty good, too. You are a 
chairman, I am not.
    Anyway, thank you and I want to thank my friend, Rick 
Boucher, the ranking member of the committee also. We served 
much time together on the Judiciary Committee.
    And my other colleagues here, some of whom I see in the gym 
early in the morning. I still go to the House gym, Mr. 
Chairman, right in this building.
    Ms. DeLauro. Where they still don't allow women.
    Senator Schumer. No, they allow women.
    Mr. Shays. Mr. Chairman, is this Senate time or House time?
    Mr. Hall. Don't you have to hurry?
    Senator Schumer. Chris is right. Ralph, Chris is right.
    When I got to the Senate, and they said, ``How much time do 
you need to speak on the floor,'' and I think, having been in 
the House for 18 years, I said, ``Well, 5 minutes,'' which 
would be a generous amount of time in the House, they said no 
one speaks on anything for less than 20 minutes on the Senate 
floor. So pardon me. Anyway, let me get to my testimony.
    The bottom line, Mr. Chairman, is that I strongly want to 
voice my support for reactivation of the Cross Sound Cable. And 
in fact, I hope we don't have to go the legislative route, 
which you know can be The Perils of Pauline.
    Today, we are urging the Department of Energy to step up to 
the plate, do the right thing, and reactivate the cable, plain 
and simple. The operation of the Cross Sound Cable is critical 
to insuring reliability and reducing electric rates throughout 
the northeast.
    A failure to reach a solution that will allow the cable to 
operate will not only hurt both sides of Long Island Sound, but 
will set a dangerous precedent and threaten electric 
reliability from one end of the country to the other by 
undermining even responsible efforts to construct new 
transmission infrastructure.
    I join my colleagues--I am glad that Pete King is here. Our 
colleagues on Long Island, Tim Bishop and Steve Israel are 
here. And we are united in our voice in this regard.
    And I have great respect for both my colleagues from 
Connecticut, but we are going to have to agree to disagree on 
this issue.
    Now, let me just make a few points here. One, this cable 
made a lot of sense before the August 14 blackout, but it makes 
just about complete sense now. And that is why the Department 
of Energy reactivated--activated the cable, because there was 
an emergency. God forbid, we have some hot days and there are 
brownouts on Long Island, it will be too late for the 
Department of Energy to declare an emergency ex post facto. We 
need them, again, to step up to the plate right now.
    Let me make a few of the arguments. We all know--and you 
have laid it out very well Mr. Chairman--the need for 
interconnectivity. This cable will benefit citizens on both 
sides of Long Island Sound. When there are shortages of 
electricity which occur in ways that we don't even know, as the 
blackout showed, to have this insurance of this cable which can 
send power from one part of the power grid to the other, that 
are not directly connected, makes imminent sense.
    The Department of Energy never should have rescinded their 
ruling that this cable was needed. As a result of the 
Department of Energy's decision, the Cross Sound Cable is 
powering political controversy when it should be powering 
homes. Unfortunately, this is nothing new about the project.
    Since it was first proposed, it has encountered political 
objections that have, at each step of the way, threatened to 
prevent the cable from coming to fruition. The current status 
is the latest and most frustrating example. As a condition of 
the permit issued for the cable, by the Connecticut Department 
of Environmental Protection, the cable must meet a depth 
requirement of 48 feet below the water's surface and 6 feet 
below the seabed. The cable satisfies this requirement in all 
but seven places which, taken together, comprise 700 feet of 
the 24-mile cable's length. And they miss the requirement only 
by 6 feet.
    To dispel any notion that this has environmental problems, 
both the Army Corps of Engineers and DEP acknowledged that 
operating the cable at its current depth would present no 
environmental threat. And yet the Connecticut DEP still did not 
allow the cable to operate and, as you mentioned, legislatively 
passed a moratorium.
    So Connecticut's been successful in stopping the operation 
of a cable by blocking attempts to solve an environmental 
problem it acknowledges doesn't exist.
    But those regulatory gymnastics aren't going to cut it as 
an explanation if the lights go out. That is why the Department 
of Energy needs to step up to the plate and do what every 
objective observer knows is the right thing to do and 
reactivate the cable to provide reliability this summer.
    One other point, just recently, Connecticut got permission 
to take sludge from New Haven Harbor, the very area we are 
talking about, and put it in the Long Island Sound. No one 
disputes that the sludge has more environmental problems to the 
Long Island Sound than the cable. And yet from the Connecticut 
State officials, particularly the gentleman leading the charge, 
we don't hear a thing.
    If the goal was the environmental viability of the Long 
Island Sound, you would certainly have a larger outcry against 
the sludge dumping than against the cable. So something is not 
right here. Any school child, whether they are in Northport or 
New Haven, would be able to tell you that toxic sludge is more 
of an environmental threat than an underground electric cable. 
It seems that Connecticut opposition to the Cross Sound Cable 
is not out of environmental concern but rather out of 
environmental convenience.
    The bottom line, Mr. Chairman, the operation of the Cross 
Sound Cable is crucial to the power and economic security needs 
of Long Island. And that is why I have been an ardent 
supporter. I know it is said--I read the Attorney General's 
testimony. He said Long Island has done nothing to increase its 
own power needs. Long Island built--LIPA, the energy utility 
there, built 15 power plants that include 600 new megawatts for 
Long Island. I stood with the environmental groups. I had to 
sort of drag some of them there to support another thousand 
megawatt plant in Melville, which will be on the road to 
construction. But as you know, the cable is insurance. It is a 
safety valve when, in our disconnected northeast power grid, 
one side of the sound or the other side has trouble.
    Now, in conclusion, Mr. Chairman, we have no problem being 
a good neighbor to Connecticut. Senator--Congressman Shays 
reminded me that our last dispute was over Gardners Island in 
1700 or something like that. In fact----
    Mr. Hall. I remember that.
    Senator Schumer. You remember that. Class of 1980. That was 
1780. Let me just say, Mr. Chairman, in fact, most of the 
natural gas that is used in Connecticut at one point or another 
goes through New York Harbor.
    We are interconnected. We need one another. We work much 
better when we work together. I am hopeful that either 
Connecticut will find some kind of compromise--and I know that 
Senator Dodd has stated publicly that he would try to seek a 
compromise, and I welcome that effort--or the Department of 
Energy step up to the plate and do the right thing. They don't 
have much time to wait. By Memorial Day, the heating season 
comes. And that is when we start our problems. So we hope they 
will step up to the plate and do what we have to do and avoid 
the need to go through the legislative path.
    With that, Mr. Chairman, I would ask unanimous consent my 
entire statement be put in the record.
    [The prepared statement of Hon. Charles Schumer follows:]

Prepared Statement of Hon. Charles E. Schumer, a U.S. Senator from the 
                           State of New York

    I would like to thank Chairman Hall, Ranking Member Boucher, and 
the rest of the members of the Subcommittee for allowing me to voice my 
support for the reactivation of the Cross Sound Cable. The operation of 
the Cross Sound Cable is critical to ensuring reliability and reducing 
electric rates throughout the Northeast.
    A failure to reach a solution that will allow the cable to operate 
will set a dangerous precedent and threaten electric reliability by 
undermining even environmentally responsible efforts to construct new 
transmission infrastructure.
    Like my colleague on this panel, Rep. King, as well as my fellow 
New Yorkers Rep. Bishop and Rep. Israel, I have been a strong advocate 
for the cable and believe that it represents a creative, 
environmentally responsible solution for meeting power needs on Long 
Island as well as Connecticut. In the wake of the August 14th blackout 
I believe even more strongly that the Cross Sound Cable provides a 
vital capability to prevent future blackouts by quickly transmitting up 
to 330 MW of electricity, or enough power to serve 330,000 homes.
    The Department of Energy's decision to shut down the cable and take 
this capacity off of the table as we head into the hot summer months is 
shortsighted and dangerously heightens the risk that we will see a 
repeat of last summer's blackout. As a result of the Department of 
Energy's decision, the Cross Sound Cable is powering political 
controversy when it should be powering homes.
    Unfortunately this is nothing new for the project. Since it was 
first proposed, it has encountered political objections that have at 
each step threatened to prevent the benefits of the cable from coming 
to fruition. The cable's current status is the latest and most 
frustrating example.
    As a condition of the permit issued for the Cross Sound Cable by 
the Connecticut Department of Environmental Protection, the cable must 
meet a depth requirement of 48 feet below the water's surface and six 
feet below the seabed. The cable satisfies this requirement in all but 
seven places which taken together comprise approximately 700 feet of 
the cable's 24-mile length, and only miss the requirements by six feet.
    Despite the fact that the Army Corps of Engineers and the DEP 
itself have acknowledged that operating the cable at its current depth 
would present no environmental threat, the DEP will still not allow the 
cable to operate. Connecticut has also enacted a moratorium that 
prevents the supposed shortfalls from being rectified.
    Connecticut's been successful in stopping the operation of the 
cable by blocking attempts to solve an environmental problem it 
acknowledges doesn't exist, but those regulatory gymnastics aren't 
going to cut it as an explanation if the lights go out. That's why the 
Department of Energy needs to step up and do what every objective 
observer knows is the right thing to do and reactivate the cable to 
provide reliability this summer. In the newly deregulated markets of 
the Northeast everyone will suffer if the grid is not upgraded and more 
strongly connected by projects like the Cross Sound Cable.
    It's not matter of theory that the operation of the Cross Sound 
Cable would have no detrimental environmental impacts, it's been 
clearly demonstrated. As a result of Secretary Abraham's emergency 
order following the August 14th blackout we have had a chance to see 
through actual operations that the cable is not an environmental threat 
and plays a critical role in ensuring electric reliability throughout 
the Northeast.
    I also find the claims of environmental concern issued by those in 
Connecticut, not necessarily include my colleagues here, who oppose of 
the cable to be inconsistent with their stance on other issues. Some 
have advocated the dumping of toxic sludge into the Long Island Sound 
as part of a project that would deepen Connecticut's harbor, creating 
an economic benefit. Any schoolchild in Northport or New Haven would be 
able to tell you that toxic sludge is more of an environmental threat 
than an underground electric cable. It seems that Connecticut 
opposition to the Cross Sound Cable is not out of environmental concern 
but environmental convenience.
    The operation of the Cross Sound Cable is crucial to the power and 
economic security needs of Long Island, which is why I have been such 
an ardent supporter of the project. However, I also believe that 
Connecticut and New York have a responsibility to be good neighbors to 
each other, and the Cross Sound Cable would allow that.
    If allowed to operate, the Cross Sound Cable will increase the 
availability of imported power to Connecticut both directly and by 
helping to loop power through the already operating Norwalk cable.
    In fact, during its operation, the cable was available on 108 
instances to provide voltage support to Connecticut, bolstering 
reliability. It was in fact the absence of this type of support that 
exacerbated the August 14th blackout.
    The Cable also transmitted power directly to Connecticut, 
automatically responded to a number of unanticipated system 
disturbances, and could help displace generation from old, air 
polluting power plants. In the short time that the cable has been 
allowed to operate, it has proven to be a benefit not just to Long 
Island, but also to the region as a whole.
    New York has no problem being a good neighbor to Connecticut. In 
fact, almost all of the natural gas used in Connecticut at one point or 
another is transported through New York. However it seems like the 
neighbor we have tried to be so good to has just put up a regulatory 
fence and is threatening to turn out our lights this summer.
    The continuing objections and obstacles to the operation of the 
Cross Sound Cable are creating a public policy failure in the making by 
placing irrational regulatory obstruction over the needs of families 
and businesses in the Northeast. In order to rise above this regulatory 
game of ``Gotcha'' and prevent blackouts this summer, the Department of 
Energy needs to show some leadership and reactivate the cable.
    It's even more clear after the events of last summer that the 
Department has a responsibility to ensure that blackouts don't again 
affect millions of Americans. If the Department does not activate the 
cable and blackouts result the cause would be nothing short of 
negligence.
    By paving the way for the reactivation of the Cross Sound Cable, 
Congress and the Administration have the opportunity to send the 
message that needed improvements in transmission can be made, and that 
the federal government has indeed made a serious commitment to 
preserving reliability. I urge the Subcommittee to send that message 
before it is too late.

    Mr. Hall. Without objection, and if you would continue to 
bless us with your presence----
    Senator Schumer. I am going to stay Mr. Chairman.
    Mr. Hall. Until the chairman of the big committee speaks, 
in order that the chairman of the little committee can keep his 
chairmanship.
    I would ask you if you would--Joe Barton. We are going to 
recognize Mr. Barton at this time for as much time as he needs 
to consume.
    Chairman Barton. I won't take that Mr. Chairman. I would 
ask that my formal statement be included in the record.
    [The prepared statement of Hon. Joe Barton follows:]

 Prepared Statement of Hon. Joe Barton, Chairman, Committee on Energy 
                              and Commerce

    Today's hearing presents a number of interesting issues. Some of 
these issues are addressed in the Conference Report for H.R. 6, the 
comprehensive energy bill, which was passed by the House and is 
awaiting action in the Senate. Other issues raised by today's hearing 
will require renewed discussions between officials in Connecticut and 
New York in order to be resolved. I hope that by the end of today's 
hearing we have an agreement from the witnesses here today to work on 
resolving both sets of issues.
    The issues raised by today's hearing that would be resolved in the 
comprehensive energy bill are as follows:

 As to the question of whether the Cross Sound Cable should remain in 
        operation, the comprehensive energy bill keeps the cable 
        energized unless Congress decides it should be turned off.
 As to the question of whether a State can delay a decision on a 
        natural gas pipeline indefinitely, the comprehensive energy 
        bill requires States to make a decision one way or another, and 
        removes the appeal of that decision to Federal court. This, and 
        other provisions in the comprehensive energy bill, will help 
        get projects, like the Islander East natural gas pipeline, 
        constructed.
    These provisions in the comprehensive energy bill will help the 
citizens of New York by increasing energy security and reliability, 
reducing the price consumers pay for electricity, and providing more, 
and more affordable, clean-burning natural gas to heat their homes and 
generate electricity.
    These provisions will also help the citizens of Connecticut, by 
reducing transmission congestion costs in their State and, in the words 
of the Connecticut Siting Council, ``enhance[ing] the inter-regional 
electric transmission infrastructure and improve[ing] the reliability 
and efficiencies of the electric system here in Connecticut as well as 
in New York.'' If Connecticut is concerned that New York is not doing 
enough to generate their own power, then help them construct a gas 
pipeline to fuel their own power plants.
    Other issues that may arise today will need to be worked out 
between officials in New York and Connecticut. As to who should pay to 
upgrade the existing transmission cables between Connecticut and New 
York, that issue needs to be worked out between those States and the 
FERC. On the question of whether New York is doing enough to build it's 
own generation, I need to point out that there is an 1100 megawatt 
power plant waiting to be approved that would supply much needed future 
power to Long Island and New York City. To be fair, though, if folks in 
Connecticut think New York should supply all of its own power needs, I 
would only point out that Connecticut imports more than 15% of its 
total annual electricity consumption from other States.
    My point is that these are regional energy problems that require 
regional energy solutions. Just like the examples of the Cross Sound 
Cable situation and our inability to finish construction of the 
Islander East gas pipeline, the comprehensive energy bill pending 
before the Senate provides us with real solutions to our Nation's 
energy problems.
    We are two votes short of the sixty needed to defeat the filibuster 
in the Senate. Fifty-eight Senators have voted in support of passing an 
energy bill this year. Senator Schumer, who is testifying here today, 
is leading the effort in the Senate to stop the energy bill. Two votes 
are all we need Senator. I know there are things in the bill that you 
may not like. There are things in there I would do differently. But 
every provision in the bill is important to some region of the country 
and some State. And together, they represent a balanced package, with 
the broadest bipartisan support we will likely get this year. I know 
you agree with me that the American people deserve a comprehensive 
energy policy. Given your interest in resolving this Cross Sound Cable 
dispute, I hope we can count on your vote in the Senate.
    With that said, I hope this hearing today does two things:

(1) I hope officials in New York and Connecticut can start working 
        again to resolve their differences; and
(2) I hope it helps us all to better understand the need to pass a 
        comprehensive energy bill this Congress.
    I look forward to hearing from our witnesses.

    Mr. Hall. Without objection.
    Chairman Barton. I know that Senator Schumer has to leave, 
so I want to make a few comments. I do appreciate this panel. 
It is good to see our friends in the House from New York and 
Connecticut and, of course, our good friend from the Senate, 
Senator Schumer, who is a former Member of this body.
    My main point is more directed to you, Senator, since we 
don't get to see you all the time over here. We have a 
comprehensive energy bill that is been languishing in the 
Senate for I guess about 6 months now. The issues that are 
before us today are addressed in that bill.
    We have a siting protocol, so that when States disagree, we 
let the FERC and the Federal courts intervene in an expeditious 
fashion. On the particular project in mind, the conference 
report would allow that cable to continue to be energized 
unless the Congress decided it should not be.
    And I am not saying the Congress should intervene between 
States. It looks like Connecticut and New York are trying to 
work this out slowly but surely, and I think, over time, you 
will.
    But my request to you Senator Schumer, would be to try to 
find a way in your heart, talk to your other Senator from New 
York. We just moved a bill through the subcommittee and full 
committee on the New York watershed. That is, I think, a bill 
that you and Senator Clinton moved over there. So we are not 
anti-New York, nor are we anti-Connecticut. I don't want my 
Connecticut friends to think that. But I would really like to 
see if we couldn't get that energy bill up for a vote. We only 
need two more votes for cloture. And you and Senator Clinton 
could be those two votes.
    If there is an issue that is just so sensitized that we 
need to work it out as a sidebar, I am sure the Speaker and the 
Majority Leader and myself and Mr. Dingell and others would be 
happy to work on that.
    So you know, my request to you is, we have got gasoline 
prices at all time highs. We have got natural gas prices at all 
times highs. We have got coal prices at all time highs. Surely 
think there ought to be a way to get two more senators to let 
the energy bill come up for a vote in the Senate.
    Senator Schumer. Okay.
    Well, Mr. Chairman, if I might respond. And first, I very 
much appreciate your coming and making the time, Mr. Chairman.
    The bottom line is a simple one. As you know, the bill was 
blocked in the Senate by a bipartisan coalition. In fact, every 
Republican from the northeast, from New England and the 
northeast, opposed the bill. And that is because the bill may 
be very good for some regions of the country, but it does real 
damage to those of us in the northeast.
    Two issues in particular led me to work with your 
colleagues, Republicans John Sununu and Judd Gregg to block the 
bill. One is the issue of MTBEs and the right to sue. We have 
here on Long Island, we have our whole watershed, we have 27 
water districts who may not have any water anymore because the 
MTBEs went into their water systems. We can't stand by as their 
taxes might go up a thousand or $2,000 to have to build a new 
watershed.
    And the second was imposing ethanol on the East and West 
Coasts. Our gas prices, as you say, are high enough. If this 
energy bill passed, we would be forced to pay for ethanol, even 
if we didn't buy it, which we wouldn't because it is so 
expensive to ship from the Midwest. We would love a compromise. 
In fact our bipartisan group, including--I guess it is five. 
There are five Republican Senators from the northeast, all who 
voted against it, every one of them. But our bipartisan group 
has reached out and said you solve--you give us a waiver on 
ethanol. You want to use ethanol in Texas or--well California 
doesn't want to use ethanol. Illinois, you want to use it in 
Illinois, that is great. Don't force us to use it when gas 
prices are high enough.
    And on MTBEs, allow the process to continue. We have had 
negotiations with some of those who have spilled these MTBEs. 
Long Island just has one aquifer. You pollute it and you ruin a 
water supply for millions. So I would love to sit down with you 
and work out those two pieces, as would all of our bipartisan 
coalition. But the energy bill has to serve the whole country, 
not just a portion of it.
    Chairman Barton. Well, the energy bill that is being 
blocked from a vote because of the two votes needed for 
cloture----
    Senator Schumer. It is four by the way. It went down two.
    Chairman Barton. Has a very good reliability section on 
electricity that would help the northeast tremendously. It 
doubles the funding for the leaking underground storage tank 
program that would solve the real problem of MTBEs. I mean, I 
could go on and on. But if it never gets to a vote, I mean, 
then there is no compromise at all if we can't get it up for a 
vote.
    Senator Schumer. It needed two votes about 4 months ago. 
Now, it needs four votes.
    Chairman Barton. Well, if I get you and Senator Clinton, it 
is back down to, we need two votes.
    Senator Schumer. Well, I can't speak for Senator Clinton.
    You give us a waiver on ethanol, allow the MTBE process to 
go forward, don't retroactively stop lawsuits that have been 
going to help the districts, I will support the bill. I have 
made that clear from the get-go. And I am not saying change 
what it does in your area, but at least make it work for us.
    Chairman Barton. Well, we--I will take that under 
consideration.
    Senator Schumer. Thank you.
    Chairman Barton. But we want to see some movement our way, 
too, from the Senate.
    Mr. Hall. All right. I thank the chairman and thank the 
Senator. Enjoyed the debate, but, you know, really the people 
that we have to think about right now are the youngsters that 
are going to have to go overseas and take some energy away from 
someone when we don't have enough of it right here at home. 
That is the real thing. And we all surely can get together when 
it is that important.
    I thank you, Senator, and if you need to go, we understand. 
If you would stay, we would be honored to have you stay.
    Senator Schumer. I am happy to stay.
    Mr. Hall. The Chair recognizes Mr. Pickering for 3 minutes, 
and 2 minutes is already gone.
    Mr. Pickering. Mr. Chairman, thank you and thank you for 
this hearing. I enjoyed the last colloquy between our 
colleagues.
    A couple of principles that I think should guide us in our 
deliberations here: One, Congress should not favor one State 
over another. This is a dispute between States. I hope that 
they can reach a compromise and work through the different 
issues. But it sets a very dangerous precedent that a large 
State could dominate a small State. And being from a small 
State, I think that is a very dangerous precedent to establish.
    Two, the solution should be part of a comprehensive 
solution to our Nation's energy policy. As Chairman Barton 
said, there are two, possibly four, senators that would break 
the filibuster in the Senate and allow all regions to benefit 
from greater energy reliability, greater transmission 
generation, distribution. It would have a mechanism that would 
resolve disputes between States. So as you look at who is 
responsible here, as far as solving this problem, that is 
very--and I agree with the senator from New York.
    It is a very significant issue for New York. It could play 
a role in the reliability of electricity in New York. If there 
is a blackout in New York, this could give a back-up that would 
allow the reliability and the energy needs of his State to be 
met.
    But it is hard for me to imagine why, if that is the case, 
that we could not find a way to move the energy bill through 
the Senate. If it is that important, that significant, if it 
has that much at stake, then I believe it should be part of a 
solution to have legislation--comprehensive legislation--that 
is good for my region, good for the northeast, good for the 
Midwest and good for the west--done and passed in a fair way. 
So with the stakes this high, I don't think that we should be 
playing a game of political chicken and saying that the 
responsibility is with everybody else but not with the New York 
senators. It starts there; it ends there.
    And when they are able to find a way to get the 
legislation, the comprehensive energy bill that is good for 
every region, passed through the Senate, then I think that they 
have the credibility to be able to come and ask for a specific 
issue that benefits their State.
    With that said, I yield back my time.
    Mr. Hall. Thank you.
    At this time, we would recognize--brevity is wonderful 
here. We recognize Congressman Green, the gentleman from Texas 
for 3 minutes. And you will be rewarded if you don't use all 3.
    Mr. Green. Thank you, Mr. Chairman. But knowing your 
rewards, I will take my 3 minutes.
    Mr. Hall. Your times is expired.
    Mr. Green. Well, let me say something nice. Chairman Hall, 
I want to thank you for holding this hearing because I think 
this is an issue that talks about the need for a National 
energy policy on a localized basis.
    The Cross Sound Cable, I think, is so important, I am glad 
to see our colleagues here and a former colleague who is now in 
the Senate. The Cross Sound Cable is a classic example of a 
project addressing both the basic and urgent energy supply 
needs just as urgent as energy reliability needs.
    The Long Island Power Authority tells us that, during the 
peak summer demand, they are within 1 percent of capacity. As a 
result, last August, the northeast, including Long Island, had 
the equivalent of a heart attack. The Cross Sound Cable is the 
bypass surgery that is needed to relieve the clogged arteries 
of Long Island, New York.
    And I commend our colleague Congressman Bishop for 
recognizing the urgent need to turn on the Cross Sound Cable 
immediately and permanently and look forward to his testimony. 
With the stability of long-term contracts and redundancy of 
interconnection, the increased flexibility provided by cable 
will greatly benefit the entire region.
    Energy Bill H.R. 6 contains a provision that is calling for 
the final Federal siting authority transmission facilities 
siting to the similar--to the authority exercised by FERC over 
natural gas pipelines. H.R. 6 provides for such authority and 
limits it to situations where the relevant State or regional 
authorities are shown to have failed to act appropriately with 
regard to facilities for areas found by the Secretary of Energy 
to be transmission constrained.
    I think the Cross Sound Cable is a classic case of why this 
provision is necessary to address this problem in interstate 
commerce today.
    And again, Senator, I would hope the Senate would deal with 
the energy bill. And of course, there are some other things you 
and I disagree on, but I would like to see the full energy bill 
pass because I think we need it for our country.
    But this is an example of one of the local needs that has 
to be done.
    And again, thank you Mr. Chairman. I will look forward to 
the testimony.
    Mr. Hall. All right. The Chair recognizes the gentleman 
from New York, Mr. Fossella.
    Mr. Issa. The gentleman from California, Mr. Issa. But that 
is all right. We are kind of look-alikes. Vito Issa.
    Senator Schumer, you just got another ally up here on the 
dais, and he is not even present. You know----
    Mr. Hall. And his times expired for sure. And your time is 
almost over.
    Mr. Issa. My time has expired again. I will take Vito's 
time.
    You know, we use a lot of expressions here in the Congress. 
You use even more in the Senate. You know, the expression that 
you know Nero fiddled while Rome burned, to a certain extent, 
speaks well here today. Both your State, New York and 
California, the East and the West Coasts have experienced--and 
Connecticut--have experienced very tight constraints on its 
energy supplies. In the information age, in the modern era, if 
we have people, but we don't have communication, which needs 
energy, and don't have energy, which runs every machine that 
makes our world go round, then in fact we are the Third World 
again. And we are not very good at being the Third World. As a 
matter of fact, we are real bad at it. And China and India and 
other countries still are pretty good at it.
    So we have to make sure that we have reliable energy, 
reliable communication. And that is this committee's primary 
responsibility as it falls in that way. And so, rather than 
fiddling while Rome burns, I would ask you, Senator, even 
though you and I see each other in the gym with great 
regularity, to our mutual benefit, is there something between 
the colloquy that you had with the chairman--in other words, as 
a Californian, don't want to be paying for Midwest ethanol to 
make corn farmers happy forever, even if we have no need for 
them.
    But I recognize that an abrupt halt in consumption, at a 
time in which they have planned and it is part of the economy 
also is unacceptable to many Members of this body and the one 
on the other end of the Capitol. So let me ask you, would you 
be willing to consider and take back to your body, in order to 
move this issue and others, some form of a--once our States 
have established an alternative to ethanol, which we have not 
done, neither one of us has certified alternatives, but once we 
have done it, to have a phaseout, a period, mutually 
acceptable, sufficient to allow ethanol to--and the underlying 
farmers not to abruptly lose it, perhaps even one that says 
essentially, as consumption rises, we get phased out.
    And at the same time, recognizing MTBE, which also has 
polluted our watersheds--and we have multiple, but they all 
have the same problem. And we are very concerned about it. Some 
form of a fund in lieu of absolute liability so that at least 
there would be predictability. And I believe that reasonable 
parties on both sides could come to at least agreement to 
agree, and then we would find the numbers.
    Could you consider that? And I know this is an opening 
statement, but I would appreciate a response.
    Senator Schumer. Yeah. No, I think those are both excellent 
questions. On the second, I have proposed that. But it has to 
be a fund--and I know that Chairman Barton mentioned that the 
leak fund has been doubled. It wouldn't even cover Suffolk 
County's needs, let alone the whole country's. It is a very 
small fund. It has to be much larger.
    But I have proposed to some of my colleagues from Texas 
that we do just what you said on MTBE. I don't care about the 
liability stuff. I don't care about the ethos of lawsuits. I 
just want to make sure that the homeowner--let me tell you a 
little example. I went and visited Fort Montgomery. A lot of 
retired people right across from Westpoint, they took their 
whole savings, invested it in their little homes after they 
served our country for 20 years. Now they have to drive a mile 
to take a shower. They have to buy all bottled water, all 
because a nearby gas company, the gasoline went into the water. 
They didn't tell them. They didn't do anything. They are ready 
to negotiate. So yes, a fund would do the job.
    On ethanol, as you know, it is not just phasing out the use 
of ethanol. What the bill does, it says you have to pay for 
ethanol if you don't use it. Now, maybe there is no alternative 
in California. We have an alternative in New York. I have 
talked to Mr. O'Malley and others, the head of our largest 
refiner----
    Mr. Issa. We have an alternative. We just don't have it yet 
approved.
    Senator Schumer. We can do it. They can crack the oil 
differently and meet the clean air standard, and they will do 
that because it is still cheaper than ethanol. But then they 
have to pay what is called an ethanol credit. It is the most 
anti-free-market thing--I know you are an advocate of the free 
market, as am I--that I have ever heard. And we know why it is 
done. I can't sit there and let my New York drivers pay another 
20 or 30 cents a gallon, which is what would happen, because 
the Midwestern corn farmers and lots of these ethanol producers 
want to do it.
    So all we are asking on that one, give us a waiver. Not on 
the Clean Air Standards; keep the air clean. But if, in certain 
areas, it makes more sense to use another process, other than 
ethanol or MTBEs for that matter, give us the waiver. That is 
all. It is very simple again.
    You need four more, you need five votes, because we have 56 
now. It went down two. And every one of my northeast 
colleagues--this is not an issue of party. This is issue of 
maybe region. Your two senators have said the damage that would 
occur if you imposed ethanol on California, Diane Feinstein has 
led the charge. And so--and I know that Congressman Cox has 
been out there as well. It is anti-free-market. It is unfair, 
and I think it is unfair to ask my drivers to pay 20, 30 cents 
a gallon to get some of the other good things, the reliability 
stuff, in the energy bill.
    And I would say that every one of you on this committee, if 
your State were in that position, would do the exact same thing 
we have done.
    Mr. Hall. In order to be fair with the other participants, 
I would ask that you make your statement, and then we will have 
the questions and answers later.
    The gentleman has finished his statement.
    Mr. Issa. Yes, Mr. Chairman. Thank you.
    Mr. Hall. All right. At this time, we recognize Mrs. 
McCarthy, the gentlelady from Missouri for 3 minutes.
    Ms. McCarthy. Mr. Chairman, I would like to waive that and 
get to the panel.
    I am just so glad to see each and every one of you. This is 
a joy, so I will put my remarks in the record and let's give 
you some more time.
    Mr. Hall. I thank the gentlelady.
    The gentleman from California, Mr. Cox.
    Mr. Cox. Thank you, Mr. Chairman.
    I will be very brief, particularly because we have a good 
opportunity with our colleagues from both sides and from both 
States, as well as FERC and DOE and representatives from New 
York and Connecticut.
    So rather than read you my opening statement and tell you 
how I would solve this problem, I just want to suggest to those 
who are going to give opening statements and testimony that, if 
you would, I would like you to help me understand a couple of 
things. First, given that the Connecticut Department of 
Environmental Protection has agreed that the cable's operation 
as it was installed would lead to no environmental harm or 
hinder navigation in the harbor, why can't we, while methods 
for reaching the required depth are devised, permit operation 
of the cable?
    Mr. Hall. The gentleman will have a chance to answer that 
when we question the panel. You go ahead with your statement.
    Mr. Cox. I am not asking questions to anybody. This is just 
my statement.
    Mr. Hall. Oh, I am sorry. Go ahead. I didn't mean to 
interrupt.
    Mr. Cox. Second, didn't we learn from the August 14, 2003, 
northeast blackout that our electrical networks' vulnerability 
and the general need for greater reliability should be 
uppermost in our decisionmaking?
    Third, why so soon after the biggest blackout in North 
American history would anyone want to make it harder to get 
power where it needs to go?
    And last, as a Californian who has seen what our State's 
decades-long failure to build new generating capacity has meant 
for us and the problems that that has created, why is it that 
the States of New York and Connecticut can seemingly agree on 
only one silly point, which is that both would prefer to feed 
the ever-growing needs of their populations by getting their 
power from somewhere else, rather than building new generating 
capacity of their own?
    I thank you, Mr. Chairman.
    Mr. Hall. I thank you.
    The Chair recognizes the gentleman from Illinois, Mr. 
Shimkus, for a fast 3 minutes.
    Mr. Shimkus. It was going to be really fast, but based upon 
some of the comments, Mr. Chairman, first of all, in the energy 
bill, if you negligently handle and spill MTBE, there is a 
liability and you are liable to be sued. This--the energy bill 
provision is for faulty products status which we here--and you 
are a Member--approved MTBE and the Clean Air Act. So let's put 
that aside.
    Second, energy security and ethanol--I am not going to 
belabor it. I would just say that, right now, anywhere across 
this country, 7 to 10 percent of fuel being used right now is 
ethanol. Where are we going to get the additional 7 to 10 
percent fuel, gasoline, that is being displaced by ethanol, and 
at what cost? There is a benefit, and some States actually have 
lower prices because of the ethanol additive right now.
    Third, wholesale electricity is an interstate commerce 
issue and is under the jurisdiction of our committee. It is 
critical for market competition, lower prices and reliability 
we have this provision in the national energy plan. We worked 
real hard. I look forward to hearing, but it is very curious 
that the northeast would now ask for special exemptions. We do 
have legislation that would fix many of these problems. I yield 
back my time.
    Mr. Hall. All right. Thank the gentleman.
    Congressman Israel or Bishop would you like to make an 
opening statement.
    Mr. Israel. Mr. Chairman, let me just thank you very much 
for extending us this courtesy. And in deference to all of my 
colleagues, I would like to submit my statement for the record.
    [The prepared statement of Hon. Steve Israel follows:]

 Prepared Statement of Hon. Steve Israel, a Representative in Congress 
                       from the State of New York

    The blackout that occurred across North America last August 
reinforced my belief that the United States must pursue a national 
energy policy that fosters greater energy security and reliability. The 
24-mile Cross Sound Cable that runs from Shoreham, NY to New Haven, CT 
is a microcosm of the challenges that lay ahead. It is unfortunate that 
this issue is pitting New York and Connecticut against one another. The 
blackout in August of 2003 illustrates the sense of urgency and fully 
demonstrates the consequences of inaction, complacency and 
parochialism. We must look past the rhetoric and seek a feasible 
approach to bring greater energy security and reliability to the 
Northeast region of the United States.
    Since August 28, 2003, the Cross Sound Cable has provided 330 
megawatts of power to Long Island and helped stabilize this fragile 
power grid. It should be noted that this cable does not run one-way, 
but has the potential to send power back to Connecticut as well. An 
advantage of the Cross Sound Cable is that it has successfully smoothed 
out system spikes in both New York and Connecticut. In fact, the Cross 
Sound Cable provided voltage support nearly 100 times since August of 
2003 with nearly 90 percent of requests for support coming from the New 
England Region.
    When operating on a full-time basis, the Cross Sound Cable responds 
automatically to system disturbances and helps reduce congestion in 
Connecticut. Since last August, the Cable was used 17 times for 
stabilization due to lighting strikes, transformer failures, 
transmission line faults and other events. It is important to note that 
12 of the 17 responses were for disturbances to the grid in 
Connecticut. Additionally, the Cross Sound Cable will enable 
Connecticut to relieve internal congestion by circulating power through 
Long Island and back to isolated parts of the state. ``Loop wheeling,'' 
which is only possible by using the Cross Sound Cable, enables power to 
flow from Connecticut to Long Island through the Cross Sound Cable and 
back to southwestern Connecticut via the existing 1385 Cable.
    The Cross Sound Cable is not about one state siphoning power from 
another. Rather, the Cable will be used to benefit energy customers on 
both sides of the Long Island Sound. In fact, Long Island has already 
shown a willingness to send power to Connecticut to help meet energy 
demand. On July 2, 2002 during an extended heat wave, power was sent to 
Norwalk, CT using the 1385 Cable that runs underneath the western 
portion of the Long Island Sound. There is no reason to believe that 
Connecticut will not also benefit from the Cross Sound Cable in this 
manner.
    I applauded the Secretary of Energy for taking previous steps to 
ensure greater energy reliability by authorizing use of the Cross Sound 
Cable on two separate occasions. I am concerned by the timing of the 
most recent action to terminate use the Cross Sound Cable and I am 
troubled by the belief that the Secretary must now wait for a ``true 
emergency'' to permit its use again. Families and businesses in the 
region deserve more than a wait-and-see approach to energy security. I 
am not confident that a bureaucratic process can effectively respond to 
the known uncertainties in the power grid. The real question is how 
long will we have to wait for the Secretary of Energy to declare, for 
the third year in a row, a power emergency that energizes the Cross 
Sound Cable? The Old Farmer's Almanac is telling the region to ``expect 
the worst heat wave in several years, with oppressive heat and 
humidity'' in mid-August of this year. Spring temperatures are already 
above seasonal averages and air conditioners are beginning to drain 
from the power supply.
    I believe we must act quickly to reinstate use of the Cross Sound 
Cable to avoid unnecessary delay and reduce the vulnerability to the 
region's energy grid. I sent a letter to Energy Secretary Spencer 
Abraham on May 14, 2004 along with Congressman King, other members of 
the Long Island Congressional Delegation, and all three New York 
members on the House Committee on Energy and Commerce. We respectfully 
requested that the Secretary of Energy rescind the termination of 
Emergency Order No. 202-03-02 and allow permanent use of the Cross 
Sound Cable. I eagerly await the Secretary's response and hope he will 
quickly act to re-energize the Cross Sound Cable.
    I have also introduced legislation with Congressman Tim Bishop that 
would authorize use of the Cross Sound Cable. H.R. 4349 would 
permanently reinstate Department of Energy Order No. 202-03-2 unless it 
rescinded by an act of Congress. This legislation would provide all 
necessary authority for the Cross Sound Cable to operate on a full time 
basis. If the Secretary of Energy were unable to rescind the 
termination of the Cross Sound Cable, and with comprehensive energy 
legislation stalled, I would hope for quick action on H.R. 4349.
    The Cross Sound Cable is part of a larger national struggle to 
enforce reliability standards and foster greater energy stability 
throughout all regions of the country. The New York economy can ill-
afford additional energy costs and unstable supply lines. I am 
confident that we can work together to find a long-term solution to 
this problem.

    Mr. Hall. Fine. Without objection. Mr. Bishop?
    Mr. Bishop. Mr. Chairman, I would take the same position. I 
thank you so much for convening this hearing, but I will submit 
my remarks for the record as well. Thank you.
    Mr. Hall. All right.
    I thank all of you and thank you for your brevity, and I 
thank you for your answers, Senator. If you have to leave----
    Senator Schumer. Thank you Mr. Chairman. I appreciate the 
courtesy, and I enjoyed the dialog and hope we can come up with 
a compromise on the energy bill. And I hope we can move forward 
with the cable.
    Mr. Hall. Go straight to work on the energy bill, and we 
will rig the drawing for you in Texas.
    [Additional statement submitted for the record follows:]

   Prepared Statement of Hon. Edward J. Markey, a Representative in 
                Congress from the State of Massachusetts

    Thank you, Mr. Chairman, for calling today's hearing.
    While all of us are hopeful that New York and Connecticut resolve 
their outstanding differences over the Cross Sound Cable, there is a 
larger issue that this Subcommittee needs to address. On August 14, 
2003 our nation experienced the worst blackout in our nation's history. 
More than 60 thousand megawatts of power was cut off from those who 
needed it, leaving 50 million consumers without electricity. Those 
consumers--our constituents--want us to ensure that it never happens 
again.
    While I am certain that the Cross Sound Cable has importance to 
those living in Eastern Connecticut and Long Island, New York, it is 
far from clear whether its operation or non-operation of this cable 
will have any major impact on the broader issue of the reliability of 
our nation's electricity grid. In fact, in its May 7, 2004, order 
terminating the requirement that the Cross-Sound Cable operate, the 
Department of Energy (DOE) cited the April 2004 report of the U.S.-
Canada Power System Outage Task Force, which it stated did not 
``identify any particular role that the Cross-Sound Cable would have 
played in stopping the spread of the outage . . .''. Based on that 
finding and other information, the Secretary of Energy found an 
emergency no longer exists, that DOE's Order should be terminated. The 
Secretary also announced that DOE would ``continue to monitor the 
transmission and electric reliability situation in New England and New 
York'' and that the Department might issue additional orders if 
circumstances changed.
    So, what do we need to do to address the potential of a repeat of 
last year's blackouts?
    First, I think that we should adopt H.R. 3004, which was introduced 
by Representative Dingell last year, and which I have cosponsored, 
which would make electricity reliability standards mandatory and 
enforceable. Democratic members of the Committee have been pressing for 
action on this legislation for several months, but the Republican 
majority has chosen instead to link its passage to enactment of the 
Bush-Cheney energy plan, which is filled with other extraneous special-
interest provisions for the oil, gas, and nuclear industries and which 
would weaken our nation's environmental laws. In fact, even the Bush 
Administration's own Department of Energy's Energy Information 
Administration has admitted that enactment of the Republican energy 
bill would have a negligible impact on energy production, consumption 
or prices. I don't think we should allow H.R. 3004 to be held hostage 
any longer. We should take it up now and pass it.
    Second, with respect to the situation in New England and the 
Northeast, it appears that while some transmission upgrades may be 
needed, the Cross Sound Channel has little real relevance to the 
reliability issues that are most pressing in our region. In this 
regard, I note that in testimony submitted to the Subcommittee in 
connection with today's hearing, ISO New England, the operator of New 
England's wholesale transmission system, has stated that while it 
supports operation of the Cross Sound Cable, the question of whether or 
not the cable is in operation has virtually no effect on New England's 
electricity transmission.
    In particular, ISO New England's testimony states that:
          ``The Cross Sound Cable has no bearing on the electric 
        reliability situation in Southwest Connecticut. It is simply 
        not in the right location. The inadequate transmission system 
        limits transportation of power from the cable location to the 
        area of most need.''
    ISO New England's testimony concludes that ``operation of the Cross 
Sound Cable does not improve the daily reliability problems that exist 
in Southwest Connecticut due to an extremely weak transmission 
system.'' At the same time, the ISO notes that ``There may be, however, 
emergency situations in which either New York or New England would 
benefit by having an additional external interconnection from which to 
receive emergency power.'' Instead of the Cross Sound Cable, the ISO 
notes that ``the 1385 cable between Southwest Connecticut and Long 
Island is a critical interconnection, and is in urgent need of repair'' 
and that ``When addressing the issue of interconnections between 
Connecticut and Long Island, it is appropriate that the situation on 
the 1385 cable also be addressed and resolved.'' I would urge FERC and 
state regulators to address this matter quickly, as it appears to be 
much more relevant to the issue of regional reliability than the Cross 
Sound Cable.
    Finally, I think that the Subcommittee needs to look very closely 
and skeptically at some of the proposals that are now under 
consideration at the FERC to provide transmission utilities with higher 
``incentive rates'' for meeting their obligation to provide wholesale 
transmission service, and to simultaneously provide generators with 
higher ``locational installed capacity'' (or LICAP) payments to 
subsidize uneconomic operations. While many of these proposals are 
being couched in arguments about reliability, it is not at all clear to 
me why such increased payments are justified and whether they bear any 
reasonable relationship to ensuring system reliability. FERC has a duty 
to help ensure that our electricity grid is reliable, but it also has a 
responsibility to ensure that the rates charged to consumers are just 
and reasonable. Why should FERC allow a monopoly transmission owner to 
receive high ``incentive'' payments in excess of the guaranteed return 
on equity that has historically been provided? And why should FERC 
authorize a LICAP subsidy for generators? Are such steps really 
necessary for grid reliability, or are they just a mechanism for 
increasing utility and generation company shareholder profits? These 
are questions that I think the Subcommittee needs to explore in much 
greater detail.
    Thanks again for calling today's hearing, Mr. Chairman. I look 
forward to reviewing all of the testimony.

    Mr. Hall. The Chair is very pleased to recognize Ms. 
DeLauro. She is a long-time Member and a lady that works just 
day and night, is the only time she works and is highly 
respected. We are happy to recognize you for as much time as 
you take.

     STATEMENT OF HON. ROSA L. DELAURO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CONNECTICUT

    Ms. DeLauro. Thank you so very much Mr. Chairman. It is a 
delight to be here before your committee. I am hopeful that the 
testimony of myself and my colleague from Connecticut, Mr. 
Shays, will persuade you in a different direction.
    I also want to welcome the Attorney General of the State of 
Connecticut here this morning, Attorney General Blumenthal. 
Delighted to have him here.
    And to the ranking member, thank you for your time and 
attention to this issue. If I can just make one----
    Mr. Hall. Rosa, would you turn your mike on.
    Ms. DeLauro. Here we go. Thank you again, Mr. Chairman.
    And I guess I would just say that I miss you, so I will 
just leave it at that.
    I wanted--Mr. Pickering is gone, but I would like to pick--
there he is. I am sorry. I think you were exactly right when 
you said that we shouldn't be favoring one State over another. 
But let me refer you to Section 1441 of the energy bill, and 
quite honestly, if you read that section, you will see that 
that is what precisely this does in the energy bill because it 
requires that the cable be activated in perpetuity. And that is 
something I wanted to call to your attention, because I don't 
think it is the role to take sides, one State against another. 
And I commend you for that comment.
    I am delighted to have this opportunity to share my 
concerns regarding Cross Sound Cable, which stretches from New 
Haven Harbor in New Haven, Connecticut, through the Federal 
navigation channel and across the Long Island Sound to 
Brookhaven, New York.
    Mr. Chairman, to allow this transmission cable to operate 
indefinitely, without complying with the conditions and the 
requirements that were outlined in both the Federal permits and 
in the State permits issued for the construction, installation 
of the cable is to condone the kind of poor energy planning 
that no one sitting here today wants.
    In that sense, I also ask that you not penalize the 
hundreds of commercial shipping and family fishing vessels that 
use New Haven Harbor by intervening in this dispute between the 
States and allowing this cable to operate.
    Since its initial proposal in 2001 the Cross Sound Cable 
has found steady and vocal opposition in Connecticut. And it is 
just not among those elected officials who are often quoted in 
the daily newspapers, but from communities of all background, 
the harbor pilots who utilize New Haven Harbor's Federal 
Navigation Channel, the fishing industry, which is a sizable 
proportion of the revenue of the State of Connecticut, 
environmental groups, yes, and concerned citizens. Groups, 
quite honestly, which rarely share any kind of a common 
interests. They all came together in an effort to stop the 
installation of this electricity transmission line.
    The proposal went through the regulatory process, both at 
the State level and at the Federal level. It eventually 
received the necessary permits for construction and for 
installation. However, the permits were not issued without 
consideration of the very, very valid economic, navigational 
and environmental impacts that this project would have, both on 
the Federal Navigation Channel and the Long Island Sound. In 
both the Federal and the State permitting process, numerous 
conditions were outlined by the regulatory bodies, and they 
were accepted by Cross Sound Cable.
    Among those conditions was the requirement that the cable 
be buried 6 feet below the seabed, in accordance with the Army 
Corps of Engineers requirements for harbor navigation. That 
condition is not met in several places. If the city of New 
Haven, which I represent, ever wanted to widen and deepen the 
harbor, it would require the removal of the cable or the burial 
of the cable to a further depth. New Haven is a port. And if we 
wanted, in order to bring in additional cargo vessels and 
increased economic activity around the port, this would be 
extremely difficult. The burial cannot occur without drilling 
through bedrock, which would have significantly adverse effect 
on the shellfish industry.
    Unfortunately, Cross-Sound Cable did not heed the warnings 
of the harbor pilots and fishermen. These are folks who have 
been in these waters for generations. They come from families 
who have utilized the harbor, and they made it clear that it 
would be impossible for Cross-Sound to install the cable at the 
required depth throughout the channel using the proposed 
techniques because they were going to come into contact with 
that bedrock. It was known from the outset that this was going 
to happen.
    So instead of returning to the drawing board, what the 
company decided to do was to move forward, and as predicted, 
they ran into problems in several areas where they were unable 
to meet the required depth conditions. It is my understanding 
that in one of these problem areas, it is probable that the 
company will not be able to meet the requirement without 
significantly more damage to the channel.
    Following the multi-state blackouts of August 2003, Energy 
Secretary Abraham issued an emergency order that allowed the 
cable to operate indefinitely. The basis of the decision was 
that the Cross Sound Cable would act to stabilize the electric 
grid. On May 7 of this year, Secretary Abraham issued another 
order that called for the cable to cease operations. In issuing 
the May 7 order, Secretary Abraham found that the emergency 
conditions that required activation of the cable no longer 
existed.
    I applaud the secretary for recognizing the reality of 
current conditions and acting appropriately. I just might add a 
note that, by February, the blackout commission's interim 
report laid the blame squarely on the shoulders of transmission 
problems in Ohio.
    No one wants--no one here wants to tie anyone's hands in 
terms of an emergency. That would be wrong, and this is not 
what we are talking about here. What we are talking about is a 
law and about abrogating what was laid down.
    In the last month, both the New York Independent System 
Operator, the New England Independent System Operator, the two 
organizations responsible for operating the region's electric 
power grid have released reports on the electricity supplies 
for the summer of 2004. Both reports express confidence that, 
with normal summer weather, there will be an adequate supply of 
electricity to meet demand. Even in the event that summer 
weather conditions are unusually warm, there is no 
justification for reactivating the cable.
    Put simply, Cross-Sound Cable, LLC has a responsibility to 
meet the conditions of both the Federal and the State permits. 
And again, it is whether or not Cross-Sound Cable will be 
allowed to break the law. Until it can do so without further 
degradation of the New Haven Harbor or the Long Island Sound, 
Cross-Sound Cable should not be able to financially benefit 
from the operation of the cable. That is simply a matter of 
good and responsible business practice.
    The Secretary's August 17 order and efforts to legislate 
the activation of this cable represent an unfortunate decision 
to trump the regulatory measures taken by several other Federal 
agencies, including the Army Corps of Engineers, the EPA, the 
Fish and Wildlife Service. That order, H.R. 6 and the 
legislation that has been introduced by members of the New York 
delegation all represent a real assault on State and Federal 
regulatory decisions. Failure to address the very real concerns 
of Federal and State regulators would essentially allow the 
company's bottom line, to supersede any and all regulatory 
authorities.
    I just state here that this is not good public policy. It 
is a dangerous path for us to travel. I hope the committee 
recognizes the need to remove this language from the energy 
bill before it is reconsidered.
    With that, I thank you so much for indulging the amount of 
time, Mr. Chairman.
    I appreciate all of your courtesy here today.
    I thank the distinguished ranking member as well and the 
committee for giving me this opportunity to speak to you. Thank 
you.
    [The prepared statement of Hon. Rosa L. DeLauro follows:]

    Prepared Statement of Hon. Rosa L. DeLauro, a Representative in 
                 Congress from the State of Connecticut

    Mr. Chairman, distinguished colleagues, thank you for this 
opportunity to share with you my concerns regarding the Cross Sound 
Cable which stretches from New Haven Harbor in New Haven, Connecticut, 
through the Federal Navigation Channel, and across the Long Island 
Sound to Brookhaven, New York. I am grateful to have this opportunity.
    Mr. Chairman, to allow this transmission cable to operate 
indefinitely without complying with the conditions and requirements 
outlined in both the federal and state permits issued for the 
construction and installation of the cable is to condone the kind of 
poor energy planning that no one here wants. In that sense, I also ask 
that you not penalize the hundreds of commercial shipping and family 
fishing vessels that use New Haven Harbor by intervening in this 
dispute between the states and allowing this cable to operate.
    Since its initial proposal in 2001, the Cross Sound Cable has found 
steady and vocal opposition in Connecticut ' not just among those 
elected officials who are often quoted in the daily newspapers, but 
from communities of all backgrounds. Environmental groups, the fishing 
industry, the harbor pilots who utilize New Haven Harbor's Federal 
Navigation Channel, and concerned citizens ' groups which rarely share 
common interests all came together in an effort to stop the 
installation of this electric transmission line.
    The proposal went through the regulatory process both at the state 
and federal levels and eventually received the necessary permits for 
construction and installation. However, these permits were not issued 
without consideration of the valid environmental, economic, and 
navigational impacts this project would have on both the Federal 
Navigation Channel and the Long Island Sound.
    In both the federal and state permitting process, numerous 
conditions were outlined by regulatory bodies and accepted by Cross 
Sound Cable. Among those conditions was the requirement that the cable 
be buried, quote, ``no less than 6 feet below the seabed or to an 
elevation of minus-48 feet mean lower low water, whichever is greater, 
within the Federal Navigation Channel in New Haven Harbor . . .'' In 
addition, under the permits, specific technology was accepted which was 
to be used by the company to install the cable.
    Unfortunately, Cross Sound Cable did not heed the warnings of 
harbor pilots and fisherman--many of whom come from families who have 
utilized the Harbor for generations--that it would be impossible for 
them to install this cable at the required depths throughout the 
Channel using these techniques because they would come into contact 
with bedrock. Instead of returning to the proverbial drawing board, the 
company chose to move forward and, as predicted, ran into problems in 
several areas where they were unable to meet the required depth 
conditions. It is my understanding that in one of these problem areas, 
it is probable that the company will not be able to meet this 
requirement without doing significantly more damage to the Channel.
    Following the multi-state blackouts of August 2003, Energy 
Secretary Spencer Abraham issued an emergency order that allowed the 
cable to operate indefinitely. The basis of his decision was that the 
Cross Sound Cable would act to stabilize the electric grid. On May 7th 
of this year, Secretary Abraham issued another order that called for 
the cable to cease operations. In issuing his May 7th order, Secretary 
Abraham found that the emergency conditions that required activation of 
the cable no longer existed. I applaud the Secretary for recognizing 
the reality of current conditions and acting appropriately.
    In the last month, both the New York Independent System Operator 
(NYISO) and the New England Independent System Operator (ISO-NE)--the 
two organizations responsible for operating the regions' electric power 
grid--have released reports on electricity supplies for the summer of 
2004. Both reports expressed confidence that, with normal summer 
weather, there will be an adequate supply of electricity to meet 
demands. Even in the event that summer weather conditions are unusually 
warm, this is no justification for reactivating the cable.
    Put simply, Cross Sound Cable, LLC has a responsibility to meet the 
conditions of both the federal and state permits. Until it can do so 
without further degradation of the New Haven Harbor or Long Island 
Sound, Cross Sound Cable should not be able to financially benefit from 
the operation of the cable. That is simply a matter of good, 
responsible business practice.
    The Secretary's August 17th order and efforts to legislate the 
activation of this cable represent an unfortunate decision to trump the 
regulatory measures taken by several other federal agencies, including 
the Army Corps of Engineers, the EPA and the Fish and Wildlife Service. 
That order, HR 6, and the legislation introduced by members of the New 
York delegation, all represent a real assault on state and federal 
regulatory decisions.
    Failure to address the very real concerns of federal and state 
regulators would essentially allow a company's bottom line to supercede 
any and all regulatory authority. That is not good public policy. It is 
a dangerous path to travel, and I hope the committee recognizes the 
need to remove this language from the Energy Bill before it is 
reconsidered.
    With that, I would like to again thank the Chairman and the 
distinguished ranking member for giving me this opportunity today. 
Thank you.

    Mr. Hall. We thank you very much.
    At this time we recognize Peter King, the distinguished 
Member from New York.

 STATEMENT OF HON. PETER T. KING, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF NEW YORK

    Mr. King. Thank you, Mr. Chairman, Ranking Member Boucher, 
members of the committee, I certainly appreciate the 
opportunity to be here today.
    And Mr. Chairman, I was really almost tempted to rely on 
the eloquence of your opening statement to make our case. But 
since I am getting paid by my constituents, I better go ahead 
and make the statement anyway, but it won't be as eloquent as 
yours was.
    I am really proud to testify here today on the importance 
of maintaining the Cross Sound Cable. The cable is a vital tool 
that provides energy security and reliability to the northeast 
region of the country. I think it is important to emphasize the 
concept of the region. Contrary to what we hear from 
Connecticut officials, the Cross Sound Cable has and will 
continue to benefit both Long Island and Connecticut. And the 
environmental fears that the Connecticut officials are 
expressing with the cable are just not supported by the facts.
    In fact, they have even been rebutted by Connecticut's own 
Department of Environmental Protection, as well as the New 
England Office of the Army Corps of Engineers. And I do have 
letters here, one from the New England District Corps of 
Engineers, December 30, 2002, and also Connecticut's Department 
of Environmental Protection. And Mr. Chairman, I would like to 
ask unanimous consent to have these submitted into the record.
    Mr. Hall. Without objection they are admitted.
    Mr. King. Actually, I was going to read them until Mr. 
Shays, in a typical bit of Connecticut pilfering, took them 
from me.
    No, seriously, I would just like to quote actually one 
section, and then the entire letter is made part of the record. 
But the Army Corps of Engineers said, ``The Corps of Engineers 
in consultation with the National Marine Fishery Service has 
determined there would be no undue short-term environmental 
harm or interference with navigation with the cable in its 
present location.'' I think it is important to keep that in 
mind.
    Also, as Senator Schumer pointed out, the dredging that is 
currently taking place in the New Haven harbor is doing 
significant more environmental damage than the cable would. 
Now, it is essential we work together as a region to expand our 
energy infrastructure and to increase supply. We are all too 
aware of the economic insecurity consequences of last year's 
blackout. Our region can't afford another power failure, and it 
is imperative that Connecticut and New York find a way to 
cooperate on this issue.
    This is a high voltage direct current cable system so the 
Cross Sound Cable allows for electricity to flow either way, 
and it is has been vital to stabilizing the region's energy 
grids since it was turned on. The electricity does not 
automatically flow in one direction but rather is directed by 
operators when a need is detected. In addition, it has 
responded quickly and automatically 18 times to reduce 
transmission system disturbances caused by lightening strikes, 
transformer failures, transmission line faults and other events 
and provided preventive voltage support over 100 times in 
Connecticut and New York under the direction of system 
operators.
    In fact, it was prepared to send 200 megawatts of power to 
Connecticut during a particularly cold spell last January. Even 
the Connecticut Energy Advisory Board in its energy plan for 
Connecticut submitted in March 2004 stated, ``The Board 
believes that extending the existing moratorium is potentially 
counterproductive. During the first moratorium, the task force 
produced some helpful deliberative work pertinent to our 
process and standards. However, the second moratorium has 
restricted State authorities from negotiating acceptable 
compromises for projects like the Cross Sound Cable and the 
1385 cables in Norwalk.''
    Mr. Chairman, the Cross Sound Cable provides energy 
security and reliability to the region. But it is also 
important to the region's economy. As we saw last August, much 
of the northeast was shut down when the blackout occurred, 
costing businesses millions of dollars. Neither New York nor 
Connecticut can afford another power failure.
    In addition, the Long Island Power Authority and its top 
man, Richard Kessel, will be testifying in a subsequent panel. 
They have estimated that Connecticut's failure and refusal to 
act could lead to $38 million in additional costs this year, 
which likely would be passed along to Long Island rate-payers. 
Additional costs will stem from State power authorities 
mandating utilities be able to sustain the capability to 
generate a certain amount of electricity. With summer 
temperatures approaching, now is not the time to reduce the 
supply.
    In conclusion, Mr. Chairman, I want to thank you for 
inviting me to testify on this issue. I really want to thank 
this subcommittee for its leadership in improving our Nation's 
energy policy and increasing reliability in the northeast. I 
was particularly pleased that there were negotiations last 
year, even though Ms. DeLauro was opposed to it, that a 
provision was included that would have made permanent Secretary 
Abraham's decision to turn on the Cross Sound Cable.
    I believe it has to be made permanent. It is essential for 
New York. It is essential for the Northeast region.
    I really know that the subcommittee will go forward with 
due deliberation. I thank you for this opportunity here this 
morning, Mr. Chairman. Also I ask for permission to include my 
full statement in the record. In deference to your desire of 
expedition, I eliminated many eloquent remarks, but people who 
want to read the record can see them later on. Thank you, Mr. 
Chairman.
    [The prepared statement of Hon. Peter King and the letter 
follow:]

  Prepared Statement of Hon. Peter King, a Representative in Congress 
                       from the State of New York

    Chairman Hall, Ranking Member Boucher, Members of the Subcommittee 
on Energy & Air Quality: Thank you very much for the opportunity to 
testify at today's hearing and express my strong support for the Cross 
Sound Cable. The cable is a vital tool that provides energy security 
and reliability to the Northeast region of the country. Contrary to 
what you may hear from Connecticut officials, the Cross Sound Cable has 
and will continue to benefit both Long Island and Connecticut. In 
addition, the environmental fears that some Connecticut officials have 
expressed with the cable are just not supported by the facts. They have 
even been rebutted by the Commissioner of the Connecticut Department of 
Environmental Protection, Mr. Arthur J. Rocque, as well as the New 
England office of the Army Corps of Engineers and various independent 
interest groups. At this time, I would like to ask for unanimous 
consent for the purpose of submitting these documents.
    Additionally, private specialists in marine and freshwater site 
surveys, such as Ocean Surveys Inc., has stated that the cable has had 
only ``minor/short term effects on bottom dwelling organisms located in 
the Sound'' and the New England District of the Army Corps of Engineers 
asserts ``there will be no undue short-term environmental harm or 
interference with navigation with the cable in its present location 
until full burial depth can be achieved.'' Finally, according to 
Commissioner Rocque, the dredging that is currently taking place in New 
Haven Harbor is doing significantly more environmental damage to the 
area than the cable would do.
    It is essential that we work together as a region to expand our 
energy infrastructure and increase supply. We are all too aware of the 
economic and security consequences of the August 13th blackout. Our 
region cannot afford another power failure and so it is imperative that 
Connecticut and New York cooperate on issues such as the Cross Sound 
Cable.
    The Cross Sound Cable is essential to increasing the supply of 
electricity to Long Island and preventing future power failures. 
According to the Cross Sound Cable Company, it has ``operated at 98% 
availability since September 2003 and transmitted an average of 200 
megawatts per day to Long Island and nearly 500,000 megawatt-hours of 
power to Long Island.'' Since it is a high voltage direct current cable 
system, the Cross Sound Cable can allow for electricity to flow either 
way and has been vital to stabilizing the region's energy grid since it 
was turned on. The electricity does not automatically flow in one 
direction but rather is directed by operators when a need is detected. 
In addition, it has ``responded quickly and automatically 18 times to 
reduce transmission system disturbances caused by lightning strikes, 
transformer failures, transmission line faults and other events and 
provided preventive voltage support over 100 times to Connecticut and 
New York under the direction of system operators.'' In fact, it was 
prepared to send 200 megawatts of power to Connecticut during a 
particularly cold spell last January. The operation of the Cross Sound 
Cable not only increases reliability in the region, but it also 
decreases Connecticut's reliance on its pollutant emitting power plants 
[New Haven].
    Even the Connecticut Energy Advisory Board in its Energy Plan for 
Connecticut submitted in March 2004 states, ``[the Board] believes that 
extending the existing moratorium (originally established under Public 
Act 02-95) is potentially counterproductive. During the first 
moratorium, the task force produced some helpful, deliberative work 
pertinent to both process and standards. However, the second moratorium 
has restricted state authorities from negotiating acceptable 
compromises for projects like Cross Sound Cable and the `1385' cables 
in Norwalk.''
    The Cross Sound Cable provides energy security and reliability to 
the region, but is also important to the region's economy. As we saw on 
August 13th, much of the northeast was shut down when the blackout 
occurred costing businesses millions of dollars. Neither New York nor 
Connecticut can afford another power failure.
    In addition, the Long Island Power Authority (LIPA) has estimated 
that Connecticut's failure and refusal to act could lead to $38 million 
in additional costs this year, which likely would be passed along to 
Long Island ratepayers. Additional costs will stem from the state power 
authorities mandating that utilities be able to sustain the capability 
to generate a certain amount of electricity. With summer temperatures 
approaching, now is not the time to reduce the supply.
    In conclusion, I want to thank the Chairman for inviting me to 
testify on this critical issue and I would like to thank the 
Subcommittee for its leadership on improving our nation's energy policy 
and increasing reliability in the Northeast. I was particularly glad to 
see that during negotiations last year on the energy conference report 
(H.R. 6), conferees included a provision that would make permanent 
Secretary Abraham's decision to turn on the Cross Sound Cable. I look 
forward to continuing to work with you and the Subcommittee on these 
very important energy issues during the remainder of this Congress.
                                 ______
                                 
                               State of Connecticut
                     Department of Environmental Protection
                                                      June 13, 2002
The Honorable Richard Blumenthal
Attorney General of the State of Connecticut
55 Elm Street
P.O. Box 120
Hartford, CT 06141-0120
    Dear Mr. Attorney General: Thank you for your letter of June 5, 
2002, concerning the Department of Environmental Protection's permit 
number 200102720-MG issued to the Cross Sound Cable Company. While I 
appreciate your advice and your viewpoint, I believe that your 
interpretation of the permit conditions for this permit and 
recommendations regarding the project are inconsistent with past 
practices of the Department.
    While it is apparently true that the cable is not presently 
installed at all points to the depth specified in the permit, Cross 
Sound has currently stopped work in compliance with the seasonal 
restrictions in the permit. As you know, these restrictions were 
imposed by DEP in order to protect spawning shellfish and anadromous 
fish. No extension or wavier of these restrictions has been requested; 
it is unlikely that it would be granted under present habitat 
conditions even if requested. The permit, however, provides in its 
terms and conditions for a three-year construction time-period, a 
standard practice on such permits. Therefore, Cross Sound is clearly 
authorized to resume their construction activities insofar as they are 
permitted when the seasonal restrictions expire without any additional 
authorization from this Department. Should Cross Sound elect to seek 
modifications of their construction activities under this permit, such 
modifications would be evaluated to determine whether or not they 
constitute minor modification. Under most circumstances and consistent 
with longstanding agency policy, such modifications would not be deemed 
either a new application or a new proceeding.
    I would be remiss if I did not note my disappointment in your 
characterization of the impacts associated with both the installation 
of the cable and the failure to attain greater depths in part of the 
federal channel as serious, critical and devastating environmental 
impacts. At no time has any reviewing permit analyst with expertise in 
marine projects, at either the state or federal level, raised concerns 
in terms approaching these. Given my own background in marine 
environments in general and Long Island Sound in particular, I must 
confess that I agree with the analysts. From an environmental 
perspective this cable project pales in comparison to even maintenance 
dredging of the federal navigational channel in New Haven Harbor. 
Moreover, in terms of direct impact on shellfish beds in particular, 
neither the cable project nor maintenance dredging begin to compare 
with the impacts associated with deepening the federal navigation 
channel. I point this out not to express concern over the 
permittability of New Haven Harbor dredging projects for which I know 
you have expressed support; they have been permitted in the past. 
Rather, I point this out over concern that published rhetoric has 
eclipsed facts on this project, at least from an environmental impact 
standpoint.
    Without a specific request before me, I think it unwise for me to 
speculate as to what our conclusion will be on the future options 
available for the Cross Sound Project. Rest assured, however, that this 
Department has taken the Cross Sound Cable project very seriously and 
would have done so even if it were not controversial. We will endeavor 
to make sure that the applicant completes the project to the best of 
their ability in accordance with the terms and conditions of the issued 
permit. Should they do otherwise, we will pursue the appropriate 
remedy. If that remedy includes the need to enforce any of the terms 
and conditions of the permit, we will, as we most always do, turn to 
your staff for assistance.
    If you have any questions or any additional comments you would like 
to make, I would be pleased to receive them.
            Sincerely,
                                       Arthur J. Roque, Jr.
                                                       Commissioner
cc: Jane Stahl, Deputy Commissioner
   Charlie Evans-DEP
                                 ______
                                 
                             Department of the Army
                   New England District, Corps of Engineers
                                                  December 30, 2002
Regulatory Division
CENAE-R-2000-01773

Cross Sound Cable Company, LLC
Attn: Mr. James P. Nash
110 Turnpike Road, Suite 300
Westborough, MA 01581
    Dear Mr. Nash: This is in response to your letter of December 23, 
2002 regarding the status of the on going effort to reinstall the cable 
in those areas where the -48' mean lower low water (mllw) depth as 
required by your Department of the Army permit was not achieved due to 
physical constraints.
    We appreciate your cooperation in responding to our requests for 
information and moving towards meeting the required depth. We 
understand you are simultaneously working with Connecticut Department 
of Environmental Protection, Office of Long Island Sound Programs 
regarding state approval for the additional reinstallation work as it 
relates to issues associated with the state moratorium against 
processing applications for authorizations for cables crossing Long 
Island Sound until June, 2003.
    The Corps of Engineers, in consultation with National Marine 
Fisheries Service has determined that there will be no undue short-term 
environmental harm or interference with navigation with the cable in 
its present location until full burial depth can be achieved. Since you 
are working in good faith to reach the required burial depth, the Corps 
of Engineers has no objections to you operating the cable at this time.
    However, we will not be relaxing the requirement to bury the cable 
to -48' mllw and we look forward to working with you and Connecticut 
Department of Environmental Protection to insure full compliance with 
the terms and conditions of your permit is achieved as soon as 
possible.
            Sincerely,
              Thomas L. Koning, Colonel, Corps of Engineers
                                                  District Engineer

    Mr. Hall. I thank the gentleman.
    Your offer to Mr. Shays, your letter reminded me of Henry 
Wade, former district attorney of Dallas, made a speech and 
sent his brother a copy of it, and his brother called him and 
said, good speech, Henry, who wrote it for you? He wrote him 
back and said, I am glad you enjoyed it. Who read it to you?
    You weren't about to read to Mr. Shays, were you?
    The Chair recognizes the gentleman.

   STATEMENT OF HON. CHRISTOPHER SHAYS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CONNECTICUT

    Mr. Shays. Thank you, Mr. Chairman. It is nice to see you 
in that position as Chair in spite of your misguided statement.
    I want to say that Mr. Schumer, like a good attorney, could 
argue on both sides of the case, and I think he would probably 
prefer to argue on the other side. The fact is we can all agree 
there is a clear need for electricity to go back and forth 
between States to protect regional energy security and ensure 
there is sufficient generated energy in ample supply to meet 
present and future demands. We can all agree on that. We may 
ultimately disagree about the value of environmental 
protections and review processes in meeting these goals, but we 
shouldn't.
    In the course of setting national energy policy, important 
environmental concerns cannot be dismissed as some want to. 
While we must make sure we have plans in place to provide 
Americans uninterrupted service, we also have a responsibility 
to future generations to ensure due diligence is done to 
prevent unnecessary and unavoidable environmental harms and 
follow due processes established to ensure we adequately 
consider environmental objections.
    Back in 2002, the Connecticut Department of Environmental 
Protection and the Army Corps of Engineers published minimum 
environmental requirements for the cable. These were minimum 
requirements. These included a stipulation for the depth at 
which cable should be buried. The cable does not comply with 
these requirements at several points along its course. Its 
failure to meet this requirement, and its activation despite 
that significant shortcoming, has been a serious source of 
concern for Connecticut. It should be for the region and for 
the entire country.
    The fact is the cable does not comply with the State of 
Connecticut's construction permit that was designed in 
consultation with the Army Corps of Engineers. It does not 
comply with the minimum environmental standards established to 
protect this precious estuary. Its permanent activation could 
have consequences for Connecticut's ecosystem, oyster industry, 
power supply and marine business. After ordering the cable 
indefinitely activated on August 28, Secretary Abraham shut 
down the Cross-Sound Cable on May 7, an action we are grateful 
for.
    Now, we have had plenty of disagreements between our 
States, but we have worked over time to clean up Long Island 
Sound. And when some talk about dredging, we have, in fact, the 
strongest dredging requirements, in consultation with our 
colleagues on both sides of the aisle, of any estuary in the 
entire country. We are the only estuary that comes under ocean-
dumping laws. If it is toxic material, it is not going to be 
allowed to be the material placed in the sites that have been 
allocated. So I think that is a red herring.
    The bottom line is this: We have a permit process. When 
they comply with the permit process, then they should be 
allowed to activate this cable, and until then, they shouldn't.
    [The prepared statement of Hon. Christopher Shays follows:]

   Prepared Statement of Hon. Christopher Shays, a Representative in 
                 Congress from the State of Connecticut

    Mr. Chairman and members of the Committee, thank you for allowing 
me to testify today about concerns we have regarding the activation of 
the Cross Sound Cable, which connects the electric transmission grids 
of New England and Long Island and transfers power in both directions.
    We can all agree there is a clear need for electricity to go back 
and forth between states to protect regional energy security and ensure 
there is efficiently-generated energy in ample supply to meet demands. 
We may ultimately disagree about the value of environmental protections 
and review processes in meeting those goals.
    In the course of setting national energy policy, important 
environmental concerns are too often dismissed.
    While we must make sure we have plans in place to provide Americans 
uninterrupted service, we have a responsibility to future generations 
to also ensure due diligence is done to prevent unnecessary 
environmental harms and to follow processes established to ensure we 
adequately consider environmental objections.
    Back in 2002, the Connecticut Department of Environmental 
Protection and the Army Corps of Engineers published minimum 
environmental requirements for the Cable. These included stipulations 
for the depth at which the Cable should be buried that it does not meet 
at several points along its course. Its failure to meet those 
requirements, and its activation despite that significant shortcoming, 
has been a serious source of concern for Connecticut.
    The fact is the Cable does not comply with the State of 
Connecticut's construction permit. It doesn't even comply with minimum 
environmental standards established to protect this precious estuary. 
And its permanent activation could have consequences for Connecticut's 
ecosystem, oyster industry, power supply and maritime business.
    After ordering it indefinitely activated on August 28, Secretary 
Abraham shut down the Cross Sound Cable on May 7, an action we are 
grateful for.
    Nonetheless, it is still important to recognize that the method by 
which he had activated the Cable in the first place overrode the 
State's legally constituted authority to regulate its construction in a 
manner that protects this important natural resource, and circumvented 
important review processes in place to ensure the environmental 
integrity of the project.
    Secretary Abraham's decision to activate the Cable and the effort 
to codify that decision in the Energy Policy Act was simply the wrong 
way to proceed.
    These actions, which followed the August 14 blackout, came despite 
Connecticut's vigorous opposition and the North American Electric 
Reliability Council's public assurances that the electric grid in the 
Northeast had returned to normal operation.
    There is a right way and a wrong way for the system to work. State 
laws need to be respected and when they are overruled, there should be 
a process that's fair for ensuring their concerns are addressed. In 
this case, we have a system in place for doing exactly that, but the 
way in which the Cable was activated bypassed the process and was 
therefore objectionable.
    Mr. Chairman, the bottom line for me is, when dealing with a 
project of this magnitude, there is a process for ensuring 
environmental fitness, which in this case, was not followed.
    It is clear we must take action to maximize energy security, but 
environmental review need and must not be compromised in the process.

    Mr. Hall. Thank you.
    Where you and Ms. DeLauro won't be too despondent, nor Mr. 
King too jubilant, when I read my statement to you, like you, I 
heard it for the first time. The Chairman is supposed to be 
neutral. I am trying to do that.
    At this time I recognize the gentleman from Virginia for 
any questions he may have.
    Mr. Boucher. I don't have any questions, Mr. Chairman.
    Mr. Hall. The Chair goes to Mr. Pickering, the gentleman 
from Mississippi.
    Mr. Pickering. My question is what are the current ongoing 
discussions between the two States? What would be the process 
if the energy bill, which does have a dispute mechanism in it 
for how siting is done, work paths, then that would give it a 
process. What concerns me now is the current process. And I 
take the point of Congresswoman DeLauro, well, how do we not 
favor one State over the other, but create a fair process that 
resolves disputes?
    This is an important issue not only for New York and 
Connecticut, but for all States as we look forward in the 
future, as we create new generation, hopefully, the need for 
new transition lines. And then the siting of those lines, 
whether it is in the Southeast or in the Northeast, are very 
important. What is the current process? I know that we are 
currently under appeal, Connecticut. Are there ongoing 
discussions between the two States to resolve this dispute? If 
so, what are they?
    Mr. Shays. I will be happy to jump in, but I would say that 
when you have Attorney Blumenthal address you, I think he can 
give you more of the specifics.
    There is the general view in Connecticut that this cable 
will be done and must be done under the permitting process. And 
so we don't want to concede that, having built it, that 
possession is nine-tenths of the law. And so the dialog, in our 
judgment, needs to conform to the permitting process, and let's 
get the job done.
    Ms. DeLauro. Let me--I concur with my colleague because I 
think the specifics of the legal process are left to the 
attorney general, and he will be speaking with you. But this is 
not an issue of whether or not the cable can be a reliable 
provider of electricity. The question is whether we want to 
circumvent State and the Federal regulatory process, and risk 
serious commercial damage and environmental damage to the port 
of New Haven in this process. That is what this is about.
    And you know, if there had been the decision, to move 
elsewhere or to heed the word of people who understood and knew 
the Sound and know about the areas where there is bedrock, this 
would just not be a problem. And to abrogate the law, as I 
said, for the bottom line of the company does not seem to be 
the direction that we ought to go in. Thank you.
    Mr. King. Congressman Pickering, I think, indicates there 
was not really much dialog going on between the two States, I 
don't believe. However, Richard Kessel, who is the chairman of 
the Long Island Power Authority, will be intimately involved in 
whatever talks are going on. He lives with this issue day in 
and day out. He will be much better qualified than I am to tell 
you what the nuances and particulars are. My own feeling is 
there is not much going on constructively between the States.
    Mr. Pickering. Congressman King, earlier Senator Schumer 
indicated that he would support the establishment of a fund 
that would clean up MTBE. As Congressman Shimkus mentioned, 
there are provisions in the energy bill now saying that if you 
are negligent, or if you were at fault under normal standards, 
not under the faulty product which was mandated by the 
government, but by other standards of litigation, that there is 
the right to sue.
    If we were to work out a compromise on a funding mechanism, 
and the reality of the political situation--I don't think 
Speaker Hastert or Leader Daschle would support a waiver on 
ethanol, that is just political reality, but there is a way 
that we can solve the MTBE question--would it be in the best 
interest of the Northeast if that compromise were reached to 
all come together, Republican and Democrat, to support the 
passage of a comprehensive energy policy?
    Mr. King. My concern with the energy bill was not the 
ethanol. I am not pleased with it, but I can live with it. I 
understand that if you are talking about a national bill, there 
has to be regional accommodations made, and I understand that.
    My concern is with the MTBE, especially as it affected 
lawsuits that were already in place. As Senator Schumer said, I 
live in Long Island. It is a sole-source aquifer. There are 
many water districts that have really been damaged severely, 
and the property tax impact, you have people's taxes going up 
20, 25 percent as a result of this. So my concern was on the 
retroactive application of the law. But, again, if we can start 
talking about a fund and have constructive talks, I would 
certainly support the bill.
    Mr. Pickering. I would just encourage you to encourage the 
Senators from New York to work with us on that. I think that 
there is a way that we could resolve that with the fund. I do 
have--I realize the problem with retroactively rescinding the 
right to sue, but at the same time it was government-mandated, 
and we need to now go forward, find a solution that actually 
cleans it up, cleans the water, helps the people that are 
affected, as Senator Schumer described, but, more importantly, 
get a comprehensive energy bill.
    I think your leadership in New York of publicly saying so 
hopefully would help the two Senators as they perform their 
duties in the Senate. Thank you.
    Mr. Hall. I thank the gentleman.
    We don't normally question Members. You can volunteer to 
answer if you want to, but I understand how busy each of you 
are and other commitments you have. We would excuse you at this 
time if you want to be excused. We would leave open for 
everyone here the opportunity to send written questions to you 
or catch you in the hall or in between votes or something to 
talk to you. But we really thank you for your time.
    Mr. Shays. Could I make a short comment, sir? No one has 
asked the opinion of--my opinion about the energy bill, but I 
shudder every time I hear the word ``comprehensive,'' because 
for me it would be comprehensive if it had much more emphasis 
on economy of energy, increasing CAFE standards. I think you 
would have found a whole group of people supportive of the bill 
if we had seen SUVs, minivans and trucks get more of the kind 
of mileage that you see in automobiles. Then I think the word 
``comprehensive'' could have been attached to this bill in a 
very fundamental way.
    Mr. Hall. I think Mr. Dingell might take a dim view of 
that.
    Mr. Shays. I know he would, but that is part of politics.
    Mr. Hall. But I think it is good that you bring it up, 
because we may have the makings of an energy bill if we all get 
together and give a little.
    Mr. Shays. If you had that, boy, I would fight for that.
    Mr. Hall. You would be a real hero if you could get us the 
energy bill.
    Mr. King. I said at the beginning this was a bipartisan 
effort from New York, and I neglected to thank Congressman 
Israel and Congressman Bishop for the great job they have done 
along with Governor Pataki. This is bipartisan. They have done 
wonderful work.
    Mr. Hall. Thank you.
    Mr. Cox had three questions. Did you all want to answer any 
of these?
    Mr. Shays. Could you quickly just review them very quickly, 
because I basically concur that you have to have transmission 
from one State to another. I took the position that this 
ultimately needed to happen. You need this cable, but do it 
according to the permitting process.
    So I don't want people to think that my objection to this 
was based on not doing it. Sometimes we will give them energy; 
sometimes they will give us energy. You need that cross-
connection. The problem we had was we think that Cross-Sound 
Cable attempted to build this cable knowing they couldn't 
provide--live up to the permit, but then having built it, 
possession would be nine-tenths of the law. They thought they 
could just ram it through and ignore the permit process, which 
was our problem.
    Mr. Hall. Mr. King.
    Mr. King. If I could reply to that. My understanding is 
that Cross-Sound Cable does want to go back in and rectify it, 
but under the moratorium from Connecticut they are not allowed 
to.
    Mr. Hall. It kind of leaves them in a dilemma.
    I think Mr. Radanovich wants to ask a question.
    Mr. Shays. We just don't want it operated, though, until 
they meet the permit process. We don't want the process for 
them to be operating it while this is in dispute.
    Ms. DeLauro. I think it is important to note that Cross-
Sound has been required to perform an environmental study of 
the effects of the cable operation. The company must repair the 
shelf beds adversely impacted by the installation of the cable. 
The company agreed to take these steps as a condition of 
receiving the permits, but has yet to complete any of the 
action. The permits were issued at specific depths and specific 
requirements, and the company has refused to do that. They just 
moved forward without doing it, so that they agree to do some 
things, and then they don't do it.
    And a final comment, Mr. Chairman. I would like to say that 
we need to deal with the energy problem. Long Island has a 
power generation deficit. It will remain an electricity 
supporter for the foreseeable future. It is difficult to 
foresee a situation in which Long Island could become a very 
meaningful exporter to the State of Connecticut, in my view. So 
I don't believe that the small benefit that Connecticut does 
receive, and we do get a very small benefit, that the very 
serious commercial risks that the cable presents and the 
environmental risks that the cable presents to our community 
are not worth it.
    Mr. Hall. Have each of you had an opportunity to express 
yourself? If so, thank you for your time. You have been great 
all three of you.
    Mr. Radanovich, I am sorry. Mr. Radanovich has asked to 
be----
    Mr. Radanovich. If I could have just a brief clarification, 
Rosa. You may be able to answer the question. I know this 
sounds like environmentally this is caught up in the energy 
bill, but what environmental hazards would exist in the laying 
of the cable across the sound?
    Ms. DeLauro. I would just say to you that the way that this 
was permitted by the Army Corps of Engineers, the State and the 
Federal permits, there were conditions that were outlined by 
these bodies. The requirement that the cable be buried 6 feet 
below the seabed in accordance with the Corps' requirements for 
harbor navigation, the condition has not been met in several 
places. So that is--so that is in effect.
    So what happens if we bypass that, in taking the position 
here over one State or another, is we are just going to 
abrogate what was the law. They agreed to these conditions. And 
they were also told by--as I said to the Chairman earlier, that 
there are people who are generational, the fisherman, the 
harbor pilots, who have come together, and the 
environmentalists and others, groups that never come together 
around this, told them they were going to have difficulty. They 
refused to go back and look at a different way in which to deal 
with it. They laid it out, and, in fact, we hit bedrock there. 
So they are not meeting the permitting requirements. That is 
the problem that I have.
    Mr. Radanovich. The main issue is the depth of the cable.
    Ms. DeLauro. That is my view.
    Mr. King. That only includes 700 feet out of 24 miles. They 
want to go back in; they want to correct it. This, by the way, 
is a survey report which was completed just several months ago, 
which I assume we can make part of the record.
    [The report follows:]

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    Mr. King. Again, the conclusion was that there has been 
minimal impact to the living organisms in the Long Island Sound 
channel.
    Mr. Radanovich. One more brief question. How deep is the 
water there where the cable doesn't meet the depth requirement? 
Do you have any idea?
    Ms. DeLauro. It was supposed to go down to 48 feet, leaving 
a 6-foot safety margin. If we wanted to and--the point I wanted 
to make was that if New Haven--and New Haven is a port, 
understand that New Haven is a port. It is not the port of 
Seattle, and it is not the port--but in terms of business and 
industry, it is second to Boston in the region. So if New Haven 
ever wanted to go deeper and dredge, we would have to deal with 
the cable and removing the cable, et cetera, and significantly 
more damage to the Long Island Sound and to the port of New 
Haven.
    Mr. King. Again, I would say this survey will show that 
there is minimal impact at all on commercial navigation.
    Mr. Hall. In fairness to Mr. Rogers and Mr. Otter, do you 
all have any brief questions that you can't submit for the 
record?
    Mr. Shimkus. I don't, Mr. Chairman, thank you.
    Ms. DeLauro. Thank you, Mr. Chairman.
    Mr. Hall. We thank you very much. We are ready for the 
second panel.
    Mr. Hall. All right. We have a very distinguished group 
here. We first have the honorable Patrick Wood, Chairman of 
FERC, longtime successful, generous giver to energy problems of 
his own State and now to his Nation. We have Honorable Lee 
Otis, general counsel for the Department of Energy; Richard 
Blumenthal, attorney general, State of Connecticut; William 
Museler, president and CEO of New York ISO; Jeff Donahue, who 
built the project of Cross-Sound Cable Company; Richard Kessel, 
chairman and CEO of Long Island Power Authority. A very 
distinguished panel.
    At this time we recognize Mr. Wood for 5 minutes. If you 
can, sir, do it in 5 minutes. We won't hold you to 5 minutes. 
If you can do it in 4, it will be acceptable.
    Mr. Wood. I think I will try to beat that.
    Mr. Hall. Yeah, and 2 minutes of those are gone.

STATEMENTS OF HON. PATRICK WOOD, III, CHAIRMAN, FEDERAL ENERGY 
    REGULATORY COMMISSION; LEE OTIS, GENERAL COUNSEL, U.S. 
  DEPARTMENT OF ENERGY; RICHARD BLUMENTHAL, ATTORNEY GENERAL, 
 STATE OF CONNECTICUT; WILLIAM J. MUSELER, PRESIDENT AND CEO, 
NEW YORK ISO; JEFFREY A. DONAHUE, CHAIRMAN AND CEO, CROSS-SOUND 
CABLE COMPANY, LLC; AND RICHARD KESSEL, CHAIRMAN AND CEO, LONG 
                     ISLAND POWER AUTHORITY

    Mr. Wood. Considering the depth of expertise on the panel, 
I would like to take a little bit more of a policy angle here, 
because I do think that is what you all ask us at the 
Commission to do, is to look at these things from a broader 
angle.
    I have heard Mr. Pickering's concerns about State versus 
State issues, and, quite frankly, a number of those in a number 
of different arenas come to our Commission, whether they are on 
gas issues or power issues or hydroelectric issues. We are 
often the arbiter, the Federal arbiter, when States can't work 
things out. So we do that for a job. It is not always the most 
enjoyable, but it tends to work.
    The statutes that govern this particular issue are a bit 
different than the typical ones we deal with that have a much 
clearer line of authority for our Commission. There have been 
amendments to the Act in 1992, the most recent energy bill, to 
allow certain types of interconnections. It is different than 
the authority under which the Secretary of Energy used to 
energize on an emergency basis this cable. But there are new 
authorities, one of which is the subject of a pending 
complaint, with a parallel line across the Long Island Sound 
between Connecticut and Long Island, which there hasn't been 
much discussion about today because it is pending before our 
Commission. I am going to avoid going into it, but some of the 
other witnesses here today may do that with regard to what are 
called the 1385 cables.
    The New York region, from an electrical and from an energy 
point of view, and greater New York I am including northern New 
Jersey, Long Island and southwestern Connecticut, in addition 
to the city, is the largest, if not the largest, load center in 
the entire country. It spreads over three large grid operators, 
the New York ISO, ISO New England and the PJM interconnection.
    And the infrastructure needs of that area are so 
significant, they have, quite frankly, dominated a lot on which 
we have focused. The harder cases before our Commission on both 
gas pipeline infrastructure and on electricity deal with about 
a 70-mile radius from downtown New York, and for that reason we 
at the Commission are very interested in seeing this problem 
that is before the committee today be resolved.
    I think certainly the encouraging signs we heard from the 
prior panel might lead us to think that this could indeed be 
addressed between and among the States. We hope that is the 
case. Nevertheless, there are Federal authority issues that may 
well be drawn into play here.
    As just a final thought I would like to say that this is an 
issue that, unlike the natural gas pipeline issue, has an 
interesting interplay between State and Federal authorities. 
The gas pipeline side of the Commission has relatively clear 
authority to do not only the siting and environmental reviews 
for interstate gas pipelines, but also does the permitting of 
the rates, terms, and conditions of the pipes.
    On the electricity side, by contrast, we can do the rates, 
terms and conditions of the line, as we did in the year 2000 
for this current project, but we do not have the front seat on 
the environmental and siting issues. That rests, as we have 
heard, with the States. There is not under current law a 
Federal court of appeal for that other than the regular State 
and Federal court process from each of the individual 
permitting agencies.
    The siting provisions in the proposed energy bill would 
change this and would put the Commission, as it has with other 
issues, as an arbiter where States do not agree or where 
Federal and broader regional interests are not addressed. I 
want to flag that again for the attention of the committee and 
observe that that is in the energy bill. I think it would 
address a number of these type issues should they pop up in the 
future.
    Thank you, and look forward to any questions, Mr. Chairman.
    [The prepared statement of Hon. Patrick Wood, III, 
follows:]

     Prepared Statement of Pat Wood, III, Chairman, Federal Energy 
                         Regulatory Commission

                      I. INTRODUCTION AND SUMMARY

    Thank you for the opportunity to testify on the operation of the 
Cross-Sound Cable (CSC or Cable). The CSC is an underwater direct 
current 330 megawatt cable system under Long Island Sound. The CSC 
connects the New England Power Pool (NEPOOL) regional transmission 
system in Connecticut to the New York Independent Transmission System 
Operator (NYISO) transmission system on Long Island, New York. Pursuant 
to orders by the U.S. Secretary of Energy, the CSC has been used at 
times over the past two years to transmit power between these two 
regions. However, the Cable is not in operation currently.
    I have testified to this Subcommittee before about the critical 
role that sufficient energy infrastructure plays in both reliability 
and in ensuring customer benefits. (Failure of infrastructure 
development to keep up with customer demands certainly played a central 
role in the California energy market price spike in 2000-2001). The CSC 
project is the first operational example of entrepreneurial, risk-
bearing transmission that the Federal Energy Regulatory Commission 
(Commission) has sought to encourage in the post-Energy Policy Act of 
1992 electric industry. ``Merchant'' transmission differs from 
traditional transmission in that its costs are not recovered through 
regulated rates, but through negotiated arrangements between the 
transmission line owner and the customer. This is important because the 
risks of merchant transmission are borne by the project's investors, 
and not captive ratepayers. In 2000, our Commission ruled on the rates, 
terms and conditions for transmission service over the Cable, and found 
that the Cable will enhance competition by expanding capacity and 
trading opportunities between the New England and New York markets. The 
Commission also found that the Cable will provide economic benefits to 
electric customers and producers in both markets while imposing no risk 
or cost on captive customers in any market. The Cable may also provide 
reliability benefits, particularly at times of electrical shortages. 
Today, four years after our Commission authorized rates, terms and 
conditions for the Cable, and after investors and wholesale 
transmission customers have made the necessary investments to get it 
built, the Cable is being taken out of operation.
    The Cable provides a classic illustration of the interstate nature 
of the transmission grid. The planning, construction, and operation of 
the Cable affect both the regional marketplace and regional 
reliability. Decisions regarding the operation of the Cable underscore 
the importance of assessing economic and reliability issues from a 
regional perspective. Building and operating a transmission line can 
have economic and reliability consequences that go beyond any single 
State. Therefore, questions about who should pay for those consequences 
must, of necessity, be considered in ways that fully protect customers 
and citizens of the affected States.

                             II. BACKGROUND

    On June 1, 2000, the Commission approved the rates, terms and 
conditions for transmission service over the Cable (June 1 Order). This 
was the first time the Commission approved rates, terms and conditions 
for a merchant transmission project. The June 1 Order contained the 
findings of economic benefits noted above. The Commission imposed 
several conditions on its approval. For example, the application 
included a proposal to hold an ``open season'' to solicit customers for 
the Cable, and the Commission imposed conditions to ensure that the 
open season process was nondiscriminatory, fair and transparent.
    In June 2002, the Commission accepted, with modifications, NEPOOL's 
amendment to its open access transmission tariff to integrate the CSC 
into the NEPOOL regional transmission system operated and administered 
by ISO New England (ISO-NE). The Commission said it was ``pleased that 
the parties worked together to meet the challenges facing the 
development of a new type of entity into the energy market.''
    Despite the foregoing, and despite the fact that none of the costs 
of the CSC are being included in captive Connecticut ratepayers' rates, 
units of the Connecticut government have opposed the operation of the 
Cable. As a result, the Cable has been operated only when authorized by 
emergency order of the U.S. Secretary of Energy--from August 1, 2002 to 
October 1, 2002 (to alleviate the emergency supply situation caused by 
a heat wave), and from August 14, 2003 to May 7, 2004 (to alleviate the 
post-Blackout disruptions in electric transmission service, as well as 
provide valuable voltage support and stabilization services for the 
electric transmission systems in both New England and New York). The 
Secretary has issued these orders pursuant to section 202(c) of the 
Federal Power Act, 16 U.S.C.  824a(c) (2000) (FPA), and section 301(b) 
of the Department of Energy Organization Act, 42 U.S.C.  7151(b) 
(2000).
    I would note that Connecticut and Long Island are interconnected 
not only by the Cross-Sound Cable but also by a set of electrical 
cables known as the ``1385 Cables.'' The 1385 Cables have been in use 
for over 30 years. In recent years, they have experienced increasing 
operational problems. A pending case before the Commission involves a 
Connecticut utility's request that the Commission use its authority 
under section 210 of the FPA to order a New York utility to assist in 
replacing the 1385 Cables. Among other things, section 210 allows the 
Commission to issue an order requiring the physical interconnection 
between two utilities, or such action as may be necessary to make 
effective any physical interconnection, if, after certain procedures, 
the Commission determines that such an order is in the public interest 
and would: ``(A) encourage overall conservation of energy or capital, 
(B) optimize the efficiency of use of facilities and resources, or (C) 
improve the reliability of any electric utility system--to which the 
order applies.'' Since the case is pending, I cannot discuss its merits 
further at this time.

                III. OPERATION OF THE CROSS-SOUND CABLE

    Over the past decade, investment in the nation's transmission 
infrastructure has not kept pace with load growth or with customers' 
desire for greater competition in wholesale power markets. As a result, 
transmission congestion and energy price differentials between regions 
have increased. Construction of appropriate transmission facilities and 
other measures that make more transmission capacity available to market 
participants can yield significant benefits in increased competition 
and improved reliability. Stand-alone, or merchant, transmission 
companies have proposed several projects to expand capacity between 
regions such as New England and New York. The Commission has sought to 
encourage such projects.
    In the case of the CSC, the Commission specifically found that the 
project would provide economic benefits to customers. The U.S. 
Secretary of Energy has found that, at least in certain circumstances, 
the operation of the Cable is needed for reliability purposes. This 
summer could be one of those circumstances. The Cable is fully built 
and ready for use. Operation of the Cable is supported by one State and 
opposed by another, each advocating its own parochial interests.
    The authority granted to the U.S Secretary of Energy under FPA 
section 202(c) has been an important tool for responding to emergency 
circumstances. Legislation has been proposed that, essentially, would 
codify the Secretary's most recent order requiring operation of the 
Cable until Congress legislates otherwise. Operation of the Cable would 
ensure that the regional benefits of the Cable will flow to customers.
    Further, it might be a good time to consider expanding the 
application of section 202(c) to also include orders requiring the 
operation of existing facilities whenever such operation is found to be 
in the public interest, not just in the event of an emergency. The view 
of one State should not be the sole determinant of whether a region's 
electrical customers receive the economic and reliability benefits of 
facilities that have already been built. In these narrow circumstances, 
the protection of interstate commerce may warrant a greater federal 
role.
    This suggestion is related to, but separate from, the issue in the 
pending energy bill of having a federal backstop for siting of 
significant new interstate power transmission projects. The same 
conflict that gave rise to that provision of the pending legislation is 
present in the Cable case, i.e., while the interconnected electricity 
grid is interstate in nature, each State has the jurisdictional 
authority to site new transmission lines needed for the region. 
Therefore, a federal arbiter is needed when States cannot agree on such 
issues. The national public interest in reliable supplies of energy for 
all customers at reasonable prices cannot be ignored.
    There is also a bigger real-world issue here. The greater New York 
City electric power marketplace, which also encompasses Long Island, 
northern New Jersey and southwestern Connecticut, is among the largest 
load centers in the country. The planning and operation of that 
regional power grid falls under the management of three separate grid 
organizations--the NYISO, ISO-NE, and the PJM Interconnection. This 
split requires a continuous, rigorous coordination effort on many 
levels--reliability, planning, markets, and fuels. To this end, the 
Commission is holding another in its series of regional infrastructure 
conferences on June 3, 2004, to explore the adequacy and development of 
electric, natural gas, and other energy infrastructure in the 
Northeast, including New York and New England. I expect that many of 
the issues addressed in this hearing, plus others from the natural gas 
industry, will be raised in the day-long conference, which my 
colleagues and I will lead. I will report on what we hear to this 
Subcommittee shortly thereafter.
    As always, my colleagues, I and our staff are always available to 
assist the Subcommittee in any way we can.

    Mr. Hall. Thank you.
    Chair recognizes Ms. Otis for 5 minutes.

                      STATEMENT OF LEE OTIS

    Ms. Otis. Thank you, Mr. Chairman and distinguished members 
of the committee. I would like to review very briefly the 
sequence of events that led to the Secretary's issuance of the 
various emergency orders under section 202 and his recent 
decision on May 7 to declare the emergency ended.
    As everyone knows, on August 14, the Northeast United 
States and Canada experienced the worst blackout that has ever 
occurred in North America, and as a result of that, within 
hours of the blackout, the Secretary of Energy issued his 
original order after consultation with the various interested 
parties, energizing the Cross-Sound Cable. On August 28, after 
reviewing the circumstances, he concluded that because the 
cause of the blackout had not yet been ascertained, an 
emergency continued to exist, and, therefore, that he would 
keep the cable operational until further order.
    After the task force on the blackout, the multinational 
task force, completed its investigation into the causes of the 
blackout and concluded in early April that the causes were not 
related to the absence of the cable or to its not being in 
operation. The Secretary determined on May 7 that no emergency 
existed, and, therefore, he ended his original order.
    What that points to is the core of what the Secretary's 
powers are under section 202(c) of the Federal Power Act, which 
is that the Federal Power Act authorizes the Secretary to act 
if he determines that an emergency exists, and to require by 
order a temporary connection of facilities and delivery 
interchange or transmission of electric energy as in his 
judgment will best meet the emergency and serve the public 
interest. This authority reserves considerable judgment to the 
Secretary, but is limited to situations in which the Secretary 
has determined that an emergency exists. He cannot order the 
activation or connection of a transmission facility in the 
absence of an emergency even if he believes the line is 
important to reliability.
    On the other hand, the Act does not define exactly what an 
emergency is. It gives some examples, such as sudden increase 
in the demand for electric energy or shortage of electric 
energy facilities for the generation or transmission of 
electric energy, but it does not define it.
    As the Secretary stated in his May 7 order, the Department 
of Energy believes that the Cross-Sound Cable is an important 
transmission asset, and that it contributes to the reliability 
of the electric transmission grid in New England and New York. 
However, as I noted, his authority under section 202(c) is not 
a broad authority to order operation of the cable whenever he 
thinks it will advance reliability, but is limited to 
situations where he determines that an emergency exists.
    Finally, the Department of Energy has stated numerous times 
that existing law is not sufficient to protect electric 
reliability and to promote the construction and operation of 
needed electric transmission facilities. Therefore, the 
administration strongly supports the electricity provisions in 
Title 12 of the H.R. 6 conference report.
    In conclusion, the Secretary has not hesitated to use the 
section 202(c) authority when presented with information that 
warrants the finding that an emergency exists. He has issued 
202(c) orders concerning the Cross-Sound Cable on several 
occasions in the past. He stands ready to do so again in the 
future if, in his judgment, it is shown that an emergency 
exists.
    We will continue to monitor reliability and the 
transmission situation in the Northeast and elsewhere in the 
country. Any person is invited to bring to the Department's 
attention at any time data or information that the person 
believes show that an emergency exists and that a 202(c) order 
would meet the emergency and be in the public interest. Thank 
you for allowing me to testify.
    [The prepared statement of Lee Otis follows:]

    Prepared Statement of Lee Liberman Otis, General Counsel, U.S. 
                          Department of Energy

    Mr. Chairman and Members of the Subcommittee, thank you for 
inviting me to testify concerning the Secretary of Energy's recent 
orders concerning the Cross-Sound Cable and the effect of the Cable's 
operation on reliability.
    On May 7, 2004, Secretary Abraham issued Order No. 202-03-4, in 
which he determined that the emergency giving rise to his earlier 
orders authorizing use of the Cable had ceased to exist, and that no 
other emergency had been demonstrated justifying continued 
authorization to use the Cable. The May 7 order briefly recounts the 
events leading up to it, but I will summarize them here, and also will 
summarize the legal authority that the Secretary used to issue his 
Cross-Sound Cable orders.
    Section 202(c) of the Federal Power Act gives the Secretary of 
Energy the authority to determine that an ``emergency'' exists, and 
``to require by order such temporary connection of facilities and such 
generation, delivery, interchange, or transmission of electric energy 
as in [the Secretary's] judgment will best meet the emergency and serve 
the public interest.'' It is this authority that Secretary Abraham has 
used when he has directed operation of the Cross-Sound Cable.
    By its terms, this section of the Federal Power Act is limited to 
situations in which the Secretary has determined an ``emergency'' 
exists. However, neither the Act nor DOE's regulations define exactly 
what an ``emergency'' is. The Act does state that an emergency can 
exist because of ``a sudden increase in the demand for electric energy, 
or a shortage of electric energy or of facilities for the generation or 
transmission of electric energy, or of fuel or water for generating 
facilities, or other causes,'' but it leaves to the Secretary's 
judgment exactly what set of facts and circumstances might constitute 
an emergency, as well as the determination of whether to issue an order 
under section 202(c) and what terms of such an order might ``best meet 
the emergency and serve the public interest.''
    On August 14, 2003, the United States and Canada experienced the 
largest electric transmission grid failure and blackout that has ever 
occurred in North America. That same day, in order to alleviate the 
emergency situation presented by the blackout, the Secretary exercised 
his authority under Federal Power Act section 202(c) and issued Order 
No. 202-03-1, which authorized operation of the Cross-Sound Cable. The 
Secretary issued that order after DOE officials had consulted with the 
independent system operators in both New England and New York, as well 
as officials at the North American Electric Reliability Council, 
electric utilities in both Connecticut and New York, and the owner of 
the Cross-Sound Cable.
    The next day, President Bush and Canadian Prime Minister Chretien 
announced the creation of a bi-national task force to investigate the 
causes of the blackout and why spread, as well as to formulate 
recommendations about what might be done to prevent blackouts from 
occurring in the future.
    The task force immediately commenced its investigative work, but 
because of the immense amount of data and information that needed to be 
analyzed and the extensive investigative work that was necessary, it 
was not possible to reach an immediate conclusion as to what had caused 
the blackout or why it spread. Therefore, on August 28, 2003, and even 
though electric service had been restored in the area affected by the 
August 14 blackout, Secretary Abraham issued an order finding the 
continued existence of an emergency, and determining that operation of 
the Cross-Sound Cable should continue to be authorized until such time 
as he issued an order determining that the emergency had ended.
    The next day, August 29, 2003, State officials from Connecticut 
filed papers with DOE seeking rehearing of the August 28 order and 
asking that DOE stay the operation of the order pending judicial 
action. Several days later, the Secretary issued an order calling for 
the submission of briefs and information with respect both to the 
rehearing request and the stay request, and establishing a schedule for 
the submission of that information. His order identified a publicly-
accessible DOE website address at which all materials submitted to DOE 
would be made available.
    In response, numerous persons, including Members of Congress, 
submitted letters, data and information to DOE concerning the Cross-
Sound Cable and its operation. All of these submissions were made 
publicly available, and the public was given the opportunity to comment 
on the submissions made by other persons.
    At the same time, the work of the bi-national task force 
investigating the August 14 blackout was proceeding. The task force 
issued an interim report in November 2003 that set forth tentative 
conclusions concerning how the blackout began and why it spread to 
certain parts of the United States and Canada. The interim report 
called for public comment concerning all aspects of the report, and 
public meetings were held in both the United States and Canada 
concerning the interim report. The task force also invited the 
submission of written comments and recommendations, which were made 
publicly available.
    In early April 2004, the bi-national task force issued its final 
report. That report identified the direct causes and contributing 
factors for the August 14 blackout. The report states that the blackout 
began in Ohio, and describes in detail the sequence of events leading 
up to the blackout, and that occurred as the blackout spread across an 
area encompassing 50 million people.
    The Cross-Sound Cable was not in operation on August 14, 2003, and 
the final report did not identify any effect that the non-operation of 
the Cable had either on the initiation of the blackout, or on its 
spread. The final report simply does not identify any particular role 
that the Cable would have played in preventing or stopping the spread 
of the outage, had it been in service on August 14, 2003.
    After issuance of that final report, DOE considered the contents of 
the report as well as DOE's earlier analysis of the data and 
information that had been submitted in response to the Secretary's call 
for information concerning the operation of the Cable. DOE also made 
its own inquiries of the relevant Independent System Operators to 
assess the power supply and transmission situation in the vicinity of 
the Cross-Sound Cable.
    In light of the reasons for and the terms of the August 28 order, 
and the data and information submitted to and developed by DOE, the 
Secretary determined that the emergency identified in his August 28 
order no longer existed. That order had authorized continued operation 
of the Cable based on the finding that an emergency continued to exist 
because ``it has not yet been authoritatively determined what happened 
on August 14 to cause the transmission system to fail resulting in the 
power outage, or why the system was not able to stop the spread of the 
outage.'' Once those facts were determined, as they were in the task 
force's final report, and because that report did not point to any role 
the Cable did or could have played in connection with the cause or the 
spread of the blackout, the Secretary determined that the emergency he 
earlier had identified no longer existed. He furthermore concluded that 
the information that the public had submitted to him, as well as the 
investigation conducted by DOE itself, did not demonstrate the 
existence of any other present emergency warranting continued 
authorization to operate the Cable under the authority of Federal Power 
Act section 202(c). Therefore, he found that the emergency he had 
identified earlier ceased to exist, and he terminated the Federal Power 
Act section 202(c) authorization to operate the Cable.
    As the Secretary stated in his May 7 order, DOE believes the Cross-
Sound Cable is an important transmission asset and contributes to the 
reliability of the electric transmission grid in New England and New 
York. In fact, the Cable was mentioned in the report of the National 
Energy Policy Development Group, in May 2001, as an important 
transmission asset, the operation of which had been blocked because the 
State of Connecticut did not recognize the importance of the facility 
to the interstate grid.
    It is important to remember that under present law, however, 
section 202(c) does not authorize DOE to direct operation of a 
transmission facility simply because the facility is important to the 
grid, promotes commerce or improves reliability. Instead, the law 
requires the Secretary to find that ``an emergency exists'' before he 
can invoke his authority to issue a 202(c) order. Therefore, this 
section of the law was not intended to be a replacement for the 
resource adequacy and transmission facility siting responsibilities 
carried out by other governmental and private bodies.
    Because the Administration believes that existing law is not 
sufficient to adequately protect electric reliability and to promote 
the construction and operation of needed electric transmission 
facilities, the Administration strongly supports the electricity 
provisions contained in Title XII of the H.R. 6 Conference Report, 
which the House approved several months ago. The bi-national blackout 
task force stated that the single most important thing that could be 
done to prevent future blackouts and reduce the scope of any that do 
occur is for Congress to enact the reliability provisions in H.R. 6 and 
make compliance with reliability standards mandatory and enforceable. 
The Administration also supports repeal of the Public Utility Holding 
Company Act and supports last-resort Federal siting authority for high-
priority transmission lines--both of those provisions would encourage 
investment in needed transmission and generation facilities.
    Finally, I want to emphasize that although there are obvious limits 
to the circumstances in which the Secretary can issue an order under 
Federal Power Act section 202(c), Secretary Abraham has not hesitated 
to use that authority when presented with data and information that, in 
his judgment, warrant a finding that an ``emergency'' exists. He issued 
an order directing operation of the Cross-Sound Cable only hours after 
the August 14, 2003 blackout occurred, and continued the directive to 
operate the Cable until it had been determined what happened on August 
14 to cause the blackout and why the system was not able to stop the 
spread of the outage. He also issued an order on August 16, 2002, 
directing operation of the Cross-Sound Cable, because it had been 
demonstrated that an emergency existed as a result of imminent 
shortages of electric energy on Long Island.
    The Department continues to monitor the reliability and 
transmission situation in the Northeast and elsewhere in the country. 
Any person is invited to bring to DOE's attention, at any time, data or 
information that the person believes demonstrates an emergency exists 
and that the Secretary should exercise his section 202(c) authority. 
The Secretary stands ready to exercise that authority, with respect to 
the Cross-Sound Cable or any other situation or facility, if presented 
with facts that demonstrate an emergency exists, and that a 202(c) 
order would alleviate the emergency and would be in the public 
interest.
    Thank you again for inviting me to testify today. I would be glad 
to answer any questions.

    Mr. Hall. Mr. Blumenthal.

                 STATEMENT OF RICHARD BLUMENTHAL

    Mr. Blumenthal. Thank you, Mr. Chairman. And thank you for 
this opportunity to be with you today, and I look forward to 
answering any questions you have. I would submit for the record 
the full statement that I have prepared and simply very 
briefly, taking to heart the admonition that you have given to 
other speakers, very briefly.
    Mr. Hall. Fine. All of your statements will be accepted and 
put into the record. Without objection.
    Mr. Blumenthal. I want to make at the outset a very 
important general point, which is that New York and Connecticut 
by and large cooperate, in fact work very, very closely 
together, on law enforcement, energy needs. And this dispute, 
if I may characterize it as such, is a real exception to that 
general pattern of cooperation. I hope there will be regional 
cooperation, specific steps toward constructive discussions and 
consensus that will enable us to avoid the continuing pattern 
of confrontation. But it must be the result of consensus among 
the States, not confrontation or conflict or overriding and 
riding roughshod over legitimate States rights and sovereign 
concerns.
    I just want to make the point that some have made this 
morning that these two States should be given the opportunity 
to resolve among themselves, without the Federal Government 
riding roughshod over their rights, the differences that they 
have now. And in my view, there should be a streamlining of our 
energy system, not steamrolling over States rights.
    We have supported in Connecticut 1385 lines, upgrading and 
even expanding them, which go between Norwalk and Northport. We 
have expanded our 345 kV lines that provide for greater 
transmission in Connecticut. We built 2,000 megawatts of 
additional generating power in Connecticut to fulfill our 
needs, and we have done our job in fulfilling our 
responsibility.
    This line is not economically neutral. It is skewed very 
unfairly in favor of Long Island. The amount that Connecticut 
consumers have to pay additionally is what Long Island 
officials have said they will save. So there is rough agreement 
on what the economic effect is. It is all skewed toward Long 
Island, as has been the flow of power in the last 9 months when 
the emergency order operated the cable; 99 percent of the power 
has flowed to Long Island. And the voltage stabilization 
benefits that supposedly accrued to Connecticut could have been 
obtained through other sources. They were not necessary as a 
result of this cable.
    So, in my view, there are real fairness issues here, and 
those fairness issues should be addressed in any system that 
transmits power within a region and among States. And I think 
that is the challenge for this committee and this Congress.
    Now, I want to make one very stark, simple point: This 
cable is illegal. My job as attorney general is to enforce the 
law. We have very strong bipartisan, unified opposition to this 
cable in the State of Connecticut on those consumer issues, 
environmental concerns, but essentially my job is to make sure 
the law is followed. And this cable is illegal because it is 
not buried according to conditions that were set by the State 
of Connecticut and by two Federal agencies; not just the United 
States Corps of Engineers, but also the United States Marine 
Fisheries Agency. And there are real impacts to potentially 
violating the law in navigation and shipping into New Haven, 
but there are also broader ramifications in rewarding 
lawbreakers. And that is what this Congress may do if it 
creates a special exception for this cable that circumvents 
permit conditions that were imposed by Federal and State 
agencies.
    The letters that you have been given previously do not in 
any way waive those permit conditions. In fact, the quotes were 
taken selectively from the letters. If you read them in their 
entirety, you will see that both State and Federal agencies 
continue to insist on those permit conditions.
    And I would just close by saying that we have a common 
challenge, and we ought to work together to meet that challenge 
in a way that serves the interest of fairness and national 
security, but preserves State sovereignty and rights to 
determine our own destinies, protect our consumers, our 
environment and navigation. Thank you, Mr. Chairman.
    [The prepared statement of Richard Blumenthal follows:]
 Prepared Statement of Richard Blumenthal, Connecticut Attorney General
    I appreciate the opportunity to speak on the topic of ``Regional 
Energy Reliability and Security: Department of Energy Authority to 
Energize the Cross Sound Cable.'' The Subcommittee's interest in the 
critical issues of energy reliability and security is timely and 
appropriate.
    The Cross-Sound Cable, along with a panoply of other proposed 
cables and pipelines, threatens to divide us and endanger vital common 
interests. These pet projects of major energy companies, if spared 
careful long-range planning and vigorous scrutiny, may wreak havoc in 
Long Island Sound. We must seek regional cooperation--not confrontation 
and conflict. We share critical environmental and consumer values, much 
as we share Long Island Sound, a precious and precarious natural 
treasure.
    Connecticut has been willing to assist Long Island in addressing 
its electricity shortfalls. We have actively sought to upgrade the 
existing 1385 cable from Norwalk to Northport in order to stop damaging 
pollution caused by the present damaged oil-leaking cable. This upgrade 
will significantly increase the amount of electricity available to Long 
Island from this cable line. We are also building a 345 KV transmission 
from Bethel, Connecticut on the border of New York to Norwalk, 
Connecticut, the site of the 1385 cable. Finally, the Connecticut 
Siting Council and the Connecticut Department of Environmental 
Protection approved permits for the Cross-Sound Cable, provided it met 
strict safety and environmental protection standards.
    This subcommittee should work to develop legislation that 
encourages public officials to build consensus and to jointly and 
fairly share the burdens and benefits of siting efficient and 
environmentally-sound generating and transmission facilities. It should 
not support hasty, ill-considered suggestions to jettison a carefully 
crafted and well established state-federal permitting program that has 
worked effectively for decades.
    Regional cooperation and long-range planning to provide safe, 
efficient and reliable electric power is obviously a desirable goal, 
which I fully support. Three core conditions are essential to any 
regional plan or system:
    1. The plan must recognize that states are best positioned and 
equipped to evaluate and assess all of the environmental and economic 
impacts of specific projects.
    2. Insofar as a plan imposes direct or indirect costs on ratepayers 
in one state to help support reliability elsewhere, the benefits of the 
plan should be shared by ratepayers in both states. The system must be 
totally transparent and accountable to the states, not just federal 
regulators. Indeed state consent and advice must be at its core. 
Consensus is a key precondition, achieved by state agreement and 
support, not federal edict or preemption.
    3. Any plan must respect the fact that states own--indeed, actually 
hold legal title to--the seabed of Long Island Sound in a public trust, 
as they have since the founding of the Republic. This public trust 
means that the federal and state governments must seek to minimize or 
eliminate environmental disruption or damage.
    The Cross Sound Cable, unfortunately, has so far failed to meet any 
of these three core conditions. It poses real dangers to Long Island 
Sound and to economically critical shipping and navigation. It 
effectively robs Connecticut ratepayers to subsidize Long Island's 
failure to plan and meet its energy needs, and it attempts to wrest 
legal control of the Connecticut seabed away from its protection as a 
``public trust'' under state and federal law.
    In fact, the Cross-Sound Cable, in its present state, suffers from 
numerous critical flaws, including the following:

 It creates a serious and substantial hazard to economically critical 
        shipping and navigation.
 It poses a severe threat to the environment by the need to blast the 
        seabed in order to place the cable at the federally required 
        depth.
 It is patently illegal.
 It costs Connecticut ratepayers millions of dollars to unfairly 
        subsidize Long Island ratepayers and the cable owners.
 It undermines incentives for Long Island to meet its obvious and 
        growing energy needs, while Connecticut is taking the tough 
        steps needed for safe and reliable electric supply.
 It provides negligible reliability benefits to Connecticut.
    Shipping and navigation in New Haven Harbor is critical to 
Connecticut's economy. About 75% of our critical supplies of gasoline 
and fuel oil arrive by this route. In 2002, the United States Army 
Corps of Engineers (Army Corps) approved the first ever longitudinal 
laying of cable in a navigational channel--in the center of New Haven 
Harbor's federal navigation channel only after Cross-Sound agreed to a 
number of conditions. The conditions were to mitigate the possibility 
that a ship might accidentally drop an anchor onto the cable--such 
incidents have occurred many times in Long Island Sound, some 
disastrously--or some other navigational accident. The Army Corps, 
therefore, ordered the cable sunk a minimum of 6 feet below the Long 
Island Sound seabed, a depth that Cross-Sound accepted as both feasible 
and appropriate. This depth requirement is not arbitrary. It is needed 
to ensure navigational safety in the most important energy supply port 
in the region. In an emergency, a large tanker needs to quickly reduce 
speed by dropping its anchor, which drags on the seabed floor for 
several hundred yards. If the anchor snags the cable, it may damage the 
tanker or alter its course, in addition to severing or disabling the 
cable.
    Following this determination of the Army Corps, the Connecticut 
Department of Environmental Protection, acting under state and federal 
law, approved a permit allowing the construction of the cable as long 
as the construction was consistent with the Army Corps six foot depth 
requirement.
    Cross-Sound, after agreeing to meet this important safety 
condition, failed to do so, claiming that unanticipated obstructions 
prevented its compliance with the permit requirement. These supposed 
unanticipated obstructions included bedrock ledge--well and widely 
known for many years. In fact, in 2000, an Army Corps official had 
specifically warned that, ``It's also likely that the applicant would 
encounter ledge just below certain reaches of the channel.'' In other 
words, the supposed unanticipated obstructions were known and willfully 
disregarded.
    Connecticut refused to issue a permit to operate the cable because 
it failed to meet the federal safety standard. Connecticut's Department 
of Environmental Protection has treated Cross-Sound Cable like any 
other applicant that fails to meet permit conditions required to 
safeguard the environment and public safety. Despite Cross-Sound's 
efforts, the Army Corps has steadfastly refused to weaken the 6 foot 
requirement.
    Turning to the second problem--environmental damage--the company 
concedes that the only way to bury the cable to a safe depth in the 
harbor would be by blasting the bed of the Sound, drilling holes in the 
bedrock, filling them with explosives such as dynamite or ammonium 
nitrate fuel oil and detonating it. In addition, the National Marine 
Fisheries Service has required as part of its permit for the Cross-
Sound Cable that such cable be buried at least 4 feet below the sea 
floor in order to minimize adverse impacts to essential fish habitat. 
The cable does not currently meet this requirement.
    As to the illegality of the cable, the violation is clear. The 
relevant Federal law `` section 404 of the Clean Water Act `` 
appropriately gives Connecticut the legal authority to protect its 
coastal waters by setting conditions before issuing permits for cable 
construction. As I have explained, Cross-Sound agreed to and then 
failed to meet a critical condition `` burial at least six feet under 
the seafloor.
    Under the Federal Power Act, the Secretary of Energy has the legal 
authority to override this law, but only in a genuine emergency. In the 
past, when the Secretary has invoked this power briefly in a genuine 
emergency, I have not opposed it. Unfortunately, after the August, 2003 
blackout ended, Secretary Abraham attempted to use it as an excuse to 
order the indefinite routine operation of the Cross-Sound Cable. He did 
so knowing that the cause of the blackout related to the Midwest power 
grid, and that no evidence has ever existed that the presence or 
absence of the Cross-Sound cable connection had anything to do with the 
blackout. Only after I challenged his order in court, and only days 
before I was scheduled to seek a stay of his order from the Second 
Circuit Court of Appeals, did Secretary Abraham rescind his illegal and 
unjustified order, effectively conceding its illegality.
    The evidence is also painfully clear regarding the economic damage 
the Cross-Sound cable inflicts on Connecticut ratepayers. Routine 
commercial use of this cable costs Connecticut consumers an estimated 
$36 million annually, due to the increase in the clearing price of 
electricity delivered into Connecticut caused by the retransmission of 
electricity from Connecticut to Long Island over the Cross-Sound cable. 
Long Island's power generation costs are generally higher that those in 
Connecticut. Electricity generally flows to the highest priced area. In 
this instance, cheaper Connecticut power will flow through the cable to 
Long Island, increasing demand and pushing up the state's electrical 
rates. As demand rises, power is sought from less efficient plants, 
called peaking plants, that generate electricity only when the need for 
power is at its height. Those plants are generally the most expensive 
to operate, thereby accelerating the upward pressure on prices in 
Connecticut. Even worse, some of the peaking plants are among the worst 
polluters, inflicting further damage on Connecticut citizens. Our 
experience to date fully supports these concerns. While the Cross-Sound 
Cable was operating, 99% of all transmitted electricity flowed from 
Connecticut to Long Island. Future forecasts of energy needs show that 
this pattern will continue.
    The economic impact on Connecticut is even more unfair because Long 
Island's current power deficit is entirely of its own making. LIPA has 
failed to develop and build new generating and transmission 
facilities--not one major plant in more than 10 years--or develop any 
long term plans. LIPA admitted that it seeks to increase power 
transmission to Long Island in order to avoid building needed 
generators on Long Island. LIPA looks to everyone else to site its 
power plants--a classic NIMBY approach.
    Astonishingly, as Connecticut seeks to upgrade the Norwalk to 
Northport cable and thereby increase the amount of electricity 
available to Long Island on an emergency basis, LIPA has refused to pay 
for its share of the upgrade. As a condition for payment, LIPA insists 
that this cable be used for routine electricity supply for Long Island, 
exacerbating the reliability problems that already exist in 
southwestern Connecticut. Upgrading the Norwalk to Northport cable is 
essential to stop its leaking of chemicals into the Sound and to repair 
its severed sections, assuring that it can operate at full capacity 
when necessary. We have supported replacing and upgrading this vital 
link. LIPA has shunned its responsibility to do the same.
    In contrast to LIPA, the State of Connecticut has recently 
developed more than 2,000 megawatts of additional electrical power and 
is upgrading approximately one hundred miles of transmission lines to 
more efficiently move electricity throughout the state. The idea that 
Connecticut ratepayers should be effectively compelled to subsidize 
LIPA's arrogant improvidence is completely unacceptable, even 
outrageous.
    Finally, in spite of all the sound and fury, the sad truth is that 
while use of the cable would save money for New York at Connecticut's 
expense, it would not significantly improve Connecticut's power 
reliability. After months of careful study, the Connecticut Siting 
Council found that it would enhance electricity reliability in 
Connecticut by less than two-tenths of one percent, an utterly 
negligible change. No one has ever seriously contested this figure.
    Recent claims that the cable has been repeatedly used to provide 
necessary ``voltage stabilization'' to Connecticut are also completely 
misleading. In fact, voltage stabilization is available to Connecticut 
from numerous generators and substations. The Cross-Sound cable adds no 
appreciable reliability for voltage stabilization to other presently 
existing sources in Connecticut. Voltage stabilization was amply 
available before Cross-Sound and remains sufficient after its shut-
down.
    No one disputes the Secretary of Energy's existing legal authority 
to act quickly in a real emergency to prevent a blackout on Long 
Island. In fact, Cross Sound seeks to operate the cable routinely, 
moving electric voltage to Long Island and money to itself. It offers 
no answer to Long Island's self-inflicted problems.
    Congress should learn from our experience with the Cross-Sound 
Cable and enact common-sense energy policies that would require public 
officials to build consensus and jointly and fairly share the burdens 
and benefits of siting efficient and environmentally sound generating 
and transmission facilities.

    Mr. Hall. Thank you, sir.
    The Chair recognizes at this time Bill Museler, president 
and CEO. Recognize you for 5 minutes, sir.

                 STATEMENT OF WILLIAM J. MUSELER

    Mr. Museler. Thank you, Mr. Chairman. I am the president of 
the New York Independent System Operator. Our job is to 
maintain the reliability of the power system in New York State 
and also operate the electricity markets in New York State. In 
a prior life I was vice president of electric operations of 
Long Island Lighting Company, so I am very familiar with the 
electric system on Long Island as well as the statewide New 
York system.
    It is very appropriate for Congress to be taking up this 
matter. As was discussed earlier, electric reliability 
legislation is before the Congress in several forms. It is 
urgent that the Congress act on the reliability portions of 
that legislation. Since 1985--excuse me, since 1965, the vast 
majority of blackouts in this country have been caused by 
utilities not following voluntary liability rules. The single 
most important action that is required from a reliability 
standpoint nationally is making those rules mandatory with 
penalties for noncompliance.
    With respect to the Cross-Sound Cable, I would like to 
mention just a few of the things that make that cable extremely 
valuable. No. 1, while the cable by itself would not have 
prevented the blackout of August 14 had that cable been in 
operation, since it is a DC facility, it would have speeded up 
the restoration of power on Long Island and presumably helped 
New York City come back faster as well because that line would 
most likely have stayed energized.
    In upstate New York, the Hydro Quebec DC line formed one-
third of the capacity we needed to bring the State back and 
reenergize the transmission system.
    Long Island, as Mr. Kessel will likely confirm, is right on 
the edge this summer because of capacity. Its locality 
requirements for electrical capacity are higher without the 
cable available for emergency transfers. It will very likely be 
shortened next year unless they are able to get more capacity 
built very, very quickly.
    The cable provides for emergency transfers of power in both 
directions. It also provides additional economic transactions, 
both ways, benefiting consumers in both States, as does the AC 
system that connects both States. It expands the Northeast 
markets. For reliability and for economic reasons, the Cross-
Sound Cable is a two-way street.
    Finally, the transmission infrastructure in the country is 
in dire need of upgrading. If projects like the Cross-Sound 
Cable cannot be sited and used, we are headed for lower 
reliability at a time when our economy needs the exact 
opposite: better reliability.
    Thank you very much for the opportunity to present these 
views of the New York ISO.
    [The prepared statement of William J. Museler follows:]

 Prepared Statement of William J. Museler, President and CEO, New York 
                      Independent System Operator

    Good afternoon, ladies and gentlemen. My name is William J. 
Museler, and I am the President and Chief Executive Officer of the New 
York Independent System Operator, or NYISO. I appreciate the 
opportunity to brief the Committee on our understanding of the impacts 
on New York State and Long Island of the Department of Energy's 
(``DOE's'') rescission of its emergency order authorizing the operation 
of the Cross-Sound Cable. In the short time available since that 
rescission, we have begun to analyze those impacts and, in this 
testimony, I am happy to present our tentative conclusions.
    Immediately prior to coming to the NYISO, I was the Executive Vice 
President of the Transmission/Power Supply Group of the Tennessee 
Valley Authority, which in terms of megawatts (``MW'') served, is the 
size of New York. Prior to that, I was Vice President of Electric 
Operations at Long Island Lighting Company. While serving as Vice 
President of Electric Operations at Long Island Lighting Company, I 
acquired familiarity with the electric system now operated by Long 
Island Power Authority (``LIPA'') and its contractor, Keyspan. I 
currently also serve as the Chairman of the ISO/RTO Council, and have 
served on the North American Reliability Council (``NERC'') Board of 
Trustees and as Chairman of the Southeast Electric Reliability Council. 
I am a graduate of Pratt Institute in Brooklyn, New York and Worcester 
Polytechnic Institute. I am a native New Yorker, born in Manhattan and 
raised in College Point, Queens.
    The NYISO was created to operate New York's bulk transmission 
system and administer the State's wholesale electricity markets. We are 
a New York not-for-profit corporation that started operation in 1999. 
We are not a governmental entity, but we are pervasively regulated by 
the Federal Energy Regulatory Commission (``FERC''). With respect to 
certain financing authority, the Federal Power Act and New York law 
provide that we are regulated by the New York State Public Service 
Commission.
    I will not address environmental or legal issues related to the 
operation of the Cross-Sound Cable. Those issues are well beyond the 
appropriate scope of the NYISO's responsibility and beyond my own 
expertise. Before addressing the operational and reliability issues 
under consideration this morning, I would like to observe that it is 
entirely appropriate for Congress to focus immediate attention on 
issues of electric reliability. Last summer, we suffered a major 
blackout that threatened the economies of the region and the health, 
safety and welfare of 50 million people in the Northeast, the Midwest 
and parts of Canada. The international task force that investigated the 
blackout determined that it was caused by a company in the Midwest that 
ignored well accepted, but voluntary, reliability standards. Because 
the Country's electric system is interconnected across state lines, 
only the federal government can address this problem effectively. There 
is legislation before you in several forms that would make compliance 
with electric utility industry reliability standards mandatory. I urge 
you to enact such legislation promptly, lest another blackout provide 
still another object lesson for all of us.
    I would now like to discuss the significance of the Cross-Sound 
Cable to New York and New England. Southeastern New York State is among 
the most congested locations in the United States in terms of electric 
transmission. Long Island is a densely populated area immediately to 
the east of New York City. Because it is an island, it presents unusual 
obstacles to constructing additional electric transmission. 
Transmission paths to Long Island must either go through New York City, 
which presents extraordinary technical difficulties and involves huge 
expense, or they must go under the Atlantic Ocean or Long Island Sound.
    The Cross-Sound Cable is one of only two underwater cables 
connecting Long Island to Connecticut. Two other cables connect Long 
Island to Westchester County. The Cross-Sound Cable is a direct 
current, or DC, ``merchant'' transmission facility. Rather than being 
owned by regulated electric utilities, merchant transmission facilities 
are owned by independent, lightly regulated, entrepreneurial companies. 
Unlike most transmission lines, the DC characteristics of the Cross-
Sound Cable permit its operator to regulate the flow of electric energy 
over the Cable. When operational, the Cross-Sound Cable could provide 
up to 23% of Long Island's summer import capability. Its existence also 
provides Connecticut with access to ``quick start'' combustion turbine 
capacity during reserve deficiency conditions. For both New York and 
New England, the Cross-Sound Cable is a two way street with respect 
both to reliability and economics.
    The adequacy of transmission capacity has both economic and 
reliability consequences for the areas affected. The most immediate 
issue, of course, is the reliability of electric supply. Insufficient 
transmission capacity can have reliability consequences for Long 
Island, Connecticut and the broader New York and New England regions.
    In New York, the amount of generating and other resources necessary 
for the State and its localities to maintain reliability must be 
calculated in accordance with criteria imposed by the Northeast Power 
Coordinating Council and the New York State Reliability Council. Prior 
to the DOE's rescission of its Emergency Order, the NYISO had 
determined that 5008 MW of generating capacity had to be physically 
available on Long Island to satisfy reliability criteria.
    The calculations assumed that the Cross-Sound Cable would be 
available immediately in the event of an emergency. If the Cable is not 
available this summer, Long Island would require additional generating 
capacity physically located on the Island in order to maintain the same 
level of reliability that existed when the Cross-Sound Cable was still 
in operation. Therefore, unless Long Island successfully procures 
additional generation for the summer, it will have a higher-than-
expected risk of outages without the Cross-Sound Cable. We understand 
that LIPA is trying to do just that but, since LIPA is represented here 
today, it is more appropriate that they be the ones to describe such 
efforts.
    The Cross-Sound Cable is also available to assist Connecticut and 
New England for reliability purposes under emergency conditions. While 
New England has added more generating capacity in recent years than New 
York, it periodically requires imports from New York to serve its own 
electrical load. For example, at times last winter there was not enough 
natural gas available for some power plants in New England to operate. 
Fortunately, New England was able to draw upon generating capacity in 
New York to meet its needs through interties connecting the two 
regions. The Cross-Sound Cable provides an additional path for imports 
from New York into New England. In short, an important reason that 
regions are electrically interconnected to begin with is to buttress 
one another's reliability at lower cost than to achieve equivalent 
reliability independently of one another.
    For the NYISO, and other entities responsible for planning to meet 
accepted reliability requirements, the present uncertainty regarding 
the Cross-Sound Cable presents a serious problem. The Cable exists, but 
we don't know whether to assume that it can be operated. Absent 
Congressional action resolving the controversy over the Cable's 
operation, the New
    York and New England regions will continue to face uncertainty 
about the availability of the cable's transmission capacity for normal 
and emergency conditions. This uncertainty is more than a mere 
inconvenience. It can cause needless expense and inefficiency. Electric 
generation and transmission facilities take many years to plan, 
finance, license and construct. Continued uncertainty can either result 
in deferral of such planning and implementation or, even worse, 
unnecessary construction, if the planners are unable to await a final 
resolution and then guess wrong about the outcome of the controversy.
    In the face of what we hope is only near term uncertainty, the 
NYISO is planning to explore interim measures to gain access to the 
Cross Sound Cable's capacity under emergency conditions. The NYISO will 
confer with the DOE and ISO-NE to attempt to develop a standby 
procedure that would permit immediate operation of the cable in the 
event an emergency develops. While the DOE has been extremely 
responsive in past emergencies, the problem is that emergencies can 
develop in a matter of seconds or minutes, leaving insufficient time to 
contact DOE, explain the situation, permit DOE to verify the problem 
and issue an order in time to make a difference.
    Because of the obviously pressing nature of the reliability 
concerns, I have not focused today on the economic benefits of inter-
regional markets and the benefits of additional transmission capacity 
to support cross boundary transactions. The ultimate purpose of the 
federal policy of restructuring the electric industry was and is to 
provide electric consumers with the benefits of open market 
competition. I would be remiss, therefore, in concluding without noting 
that FERC's extensive efforts to expand the regional and inter-regional 
scope of wholesale electricity markets is dependent on the adequacy of 
inter-regional transmission facilities such as the Cross-Sound Cable. 
We support FERC's policies and believe that expanded regional 
electricity markets will maximize the benefits of electric 
restructuring for consumers.
    Finally, I appreciate the attention the Congress has given to this 
matter. It relates to an essential element of interstate commerce and 
only the federal government can resolve these issues in an adequate and 
timely manner.

    Mr. Hall. Thank you very much.
    We recognize Mr. Donahue, 5 minutes.

                 STATEMENT OF JEFFREY A. DONAHUE

    Mr. Donahue. Thank you, Mr. Chairman and members of the 
subcommittee. Thank you for the opportunity to speak with you 
today.
    While the Cross-Sound Cable has been the subject of 
considerable controversy over the last couple years, one point 
cannot be disputed: the Cross-Sound Cable is the first major 
interstate electric transmission project built in the Northeast 
in the last decade. For better or worse, the Cross-Sound Cable 
has been used as a poster child for many purposes: first, as 
the first market-based transmission link in the United States; 
as the first application in the U.S. of advanced high-voltage, 
direct-current transmission technology and advanced underground 
cables; and, perhaps most widely, as a symbol of what is wrong 
with our Nation's framework for siting electric infrastructure.
    My testimony today will seek to provide the subcommittee 
with the facts regarding some important points that you have 
heard earlier today. Specifically, my testimony will focus on 
three key points: the operation of the Cross-Sound Cable 
provides significant and substantial benefits to Connecticut 
and New York both in the form of improved reliability, as you 
heard from Mr. Museler, and in enhancing trade of energy 
between the New York and New England regions.
    Operation of the cable ``as is where is'' today provides 
absolutely no impact to the environment or absolutely no impact 
to navigation in the New Haven Harbor or elsewhere in Long 
Island Sound.
    Finally, Cross-Sound Cable is currently in an unacceptable 
Catch-22 situation created by the Connecticut authorities under 
which Connecticut refuses to let us operate on the grounds that 
certain permit conditions have not been met despite all the 
agencies in Connecticut and the national level acknowledging 
there are no impacts, while at the same time refusing to 
consider our request for either complying with the permits, 
which we want to do, or waiving subject permit conditions.
    First, the issue of the significant benefits to Connecticut 
and New York Long Island. As you heard, the Cross-Sound Cable 
was not energized during the August 14 blackout. At 11 that 
evening on August 14, there was a conference call between the 
system operators, Cross-Sound Cable, LIPA, the Department of 
Energy, and we were ordered to immediately activate the 
project. Within 12 hours the project was activated, and we were 
transferring a significant amount of energy to Long Island, 
helping consumers come back on line and, very importantly, 
helping stabilize the grid.
    During that first couple days of the recovery from the 
blackout, the facilities were transferring not only energy to 
Long Island that was severely needed, but also helped stabilize 
the voltage when there was a severe lightning storm that came 
through the area and disrupted transmission lines on Long 
Island.
    Since that time, since August 14, the project has operated 
18 times dynamically, automatically, when there have been 
equipment failures or lightning strikes on the transmission 
grid. It is improving the reliability of the grid on both 
sides. Two-thirds of those 18 times occurred in Connecticut.
    And, finally, since August 14, these facilities have 
provided significant voltage support in both Long Island and 
New York. It is a service that must have some value because we 
are ordered on a regular basis to provide it, and we do at the 
direction of the system operators in Connecticut who have the 
responsibility of ensuring that the grid operates reliably.
    Also, the project has been used on several occasions to 
help the wholesale markets in Connecticut and in Long Island. 
In fact, when Connecticut's energy supply was at dangerously 
low levels during an extreme cold spell in January 2004, we 
were ordered by the New England ISO to stop immediately any 
transfers to Long Island, which, of course, we did immediately, 
and LIPO was ordered to make up to 200 megawatts of energy 
immediately available to export to Long Island because of the 
critical cold spell they had. LIPO had significant and 
sufficient resources to do that, and we were ready to supply 
the energy. Luckily for Connecticut, the temperatures 
increased, the load was left low, and Long Island did not have 
to ship the power in the end, but we were available to provide 
that service. We also tempered wholesale prices during that 
time. So the project does provide significant benefits.
    There is no environmental impact of operating as is where 
is. All State and Federal agencies with jurisdiction over the 
cable have reviewed operation of the cable as is where is. 
Specifically the Connecticut Department of Environmental 
Protection, the National Marine Fisheries and the U.S. Army 
Corps of Engineers all have determined that there is absolutely 
no environmental impact as of operating as is where is and no 
threat to navigation or maintenance of the Federal channel.
    The DEP has looked at this for quite some time. I think it 
is interesting to note a letter that they wrote on June 13, 
2002, to Mr. Blumenthal. In that letter they made it very clear 
that the published rhetoric of this project was eclipsing the 
facts. I would like to quote from that letter, from Mr. Art 
Rocque, the Chairman of the Department of Environmental 
Protection, to Mr. Blumenthal: ``I would be remiss if I did not 
note my disappointment in your characterization of the impacts 
associated with both the installation of the cable and the 
failure to attain greater depths in parts of the Federal 
channel as serious, critical and devastating to the 
environment. From an environmental perspective the cable 
project pales in comparison with even maintenance dredging of 
the Federal navigational channel in New Haven. Published 
rhetoric has eclipsed facts on this project at least from an 
environmental standpoint.''
    The Catch-22. We are not happy. I can say we spoke with all 
the fishermen that we could find, with the harbor master, with 
the pilots, with the U.S. Army Corps of Engineers. We spent 
millions of dollars surveying the route, working with the 
Connecticut Siting Council, looking at the harbor. We were 
requested by the U.S. Army Corps of Engineers would we consider 
a minus 48 burial depth below mean water. After thorough 
investigation and consultation with our engineers and the Corps 
we agreed. We knew about rock in the further reaches of the 
channel that Ms. DeLauro spoke of earlier. We surveyed it 
completely, and we avoided it all. Unfortunately we did find 
rock in an area that was not on any charts or any logs that we 
had done or the Corps or anybody else had done over the past 
100 years, and we are now in this current situation.
    We have made five separate proposals to the Connecticut DEP 
to either bury the cable to its permitted depth or operate the 
cable in its current location with no environmental impact. 
Four of those five proposals have been refused. The fifth is 
still pending. On January 6, 2003, the DEP wrote us, ``While we 
may not have any environmental concerns with the operation of 
the cable in its current conditions, we do have significant 
procedural concerns.''
    The substantial and economic benefits and improved 
reliability that is available from our project come at no cost 
to Connecticut and without any harm to the environment or 
threat to navigation in New Haven Harbor or anywhere else on 
Long Island Sound. Instead of enjoying the Cross-Sound Cable 
benefits, Connecticut insists on maintaining this Catch-22 
situation under which Connecticut precludes operation of the 
cable on the grounds that we don't meet permit conditions, yet 
will not allow the Connecticut DEP to evaluate our request to 
make modifications.
    I think this is wrong. I think public policy needs to be 
debated. And I respectfully urge the subcommittee to approve 
necessary legislation to immediately reenergize and place into 
regular operation the Cross-Sound Cable so that Connecticut, 
New York, and the region can enjoy the substantial benefits of 
the project. We thank you for your time.
    [The prepared statement of Jeffrey A. Donahue follows:]

Prepared Statement of Jeffrey A. Donahue, Chairman and CEO, Cross-Sound 
                           Cable Company, LLC

                      I. INTRODUCTION AND SUMMARY

    Mr. Chairman and Members of the Subcommittee: Thank you for the 
opportunity to speak today on the many benefits the Cross Sound Cable 
electric transmission project provides to Connecticut, New York, and 
the Northeast. My name is Jeffrey A. Donahue, and I am Chairman and 
Chief Executive Officer of Cross-Sound Cable Company, LLC (``CSC 
LLC''). A summary of my experience and qualifications is attached as 
Exhibit JAD-1.
    While the Cross Sound Cable (``CSC'' or ``Project'') has been the 
subject of considerable controversy over the last few years, one point 
is incontrovertible--the CSC is the first major interstate electric 
transmission project to be built in the Northeast in more than a 
decade. For better or worse, the CSC has been used as a ``poster 
child'' for many purposes: as the first market-based transmission link 
in the U.S.; as the first application in the U.S. of advanced high 
voltage direct current transmission technology and advanced underground 
cable installation techniques; and, perhaps most widely, as a symbol of 
what is wrong with our Nation's framework for siting needed electric 
transmission infrastructure.
    Rather than add to the political rhetoric you may have heard 
regarding the CSC, my testimony today seeks to provide the Subcommittee 
with the facts regarding this important infrastructure project. 
Specifically, my testimony makes the following three key points:

1. Operation of the CSC provides significant and substantial benefits 
        to Connecticut and New York, both in the form of improved 
        reliability to the electric grid and enhanced trade of energy 
        between New England and New York.
2. Operation of the CSC ``as is where is'' has absolutely NO impact on 
        the environment of Long Island Sound, nor does it provide any 
        impediment to navigation in New Haven Harbor or elsewhere in 
        Long Island Sound.
3. The CSC is currently in an unacceptable ``Catch-22'' situation 
        created by Connecticut authorities, under which Connecticut 
        refuses to let the CSC operate on the grounds that certain 
        permit conditions have not been met (despite acknowledging the 
        lack of impacts from CSC operation) while at the same time 
        refusing to consider CSC LLC's requests to either comply with 
        or waive the subject permit conditions.
    With this testimony, I intend to provide the Subcommittee with the 
facts and background necessary to gain a better understanding of the 
CSC and the need for its immediate re-energization and placement into 
regular commercial service through the enactment of Federal 
legislation.

                II. DESCRIPTION OF THE CROSS SOUND CABLE

    The CSC is a 330 megawatt bi-directional, high voltage direct 
current and fiber optic cable system that runs under Long Island Sound 
and can transmit electricity in either direction between New Haven, 
Connecticut and Brookhaven, Long Island, New York. CSC LLC commissioned 
the Project in August 2002. CSC LLC is a joint venture between 
TransEnergie U.S. Ltd., a wholly-owned subsidiary of Hydro-Quebec, and 
United Capital Investments, Inc., a non-regulated business unit of UIL 
Holdings, Inc., which owns the United Illuminating Company, a regulated 
utility in Connecticut.

                 III. HISTORY OF THE CROSS SOUND CABLE

    My October 2003 affidavit to the Department of Energy, attached as 
Exhibit JAD-2, provides a complete history of the permitting of the 
Project. For ease of reference, I have summarized this history below.
    On June 1, 2000, the Federal Energy Regulatory Commission 
(``FERC'') granted the CSC project sponsors the first-of-its-kind 
authorization to make sales of electric transmission capacity in 
interstate commerce at negotiated rates. TransEnergie U.S. Ltd., 91 
FERC  61,230 (2000). FERC granted this authorization because the full 
financial risk for the project costs is borne by the developer (i.e., 
CSC LLC) rather than captive ratepayers, and because the project 
``enhances competition and market integration by expanding capacity and 
trading opportunities between the New England and New York markets.'' 
Id. at 61,838. Pursuant to an ``open season'' auction process, the Long 
Island Power Authority (``LIPA'') subscribed to the full capacity of 
the CSC.
    CSC LLC then began the process to obtain the required state and 
federal permits. The New York State Public Service Commission 
(``NYPSC'') granted a certificate of environmental compatibility and 
public need on June 27, 2001, finding that the CSC will ``enhance 
regional and local competition in the electric power industry and [] 
improve system reliability.'' (NYPSC Article VII approval at 12.) The 
Connecticut Siting Council (``Siting Council'') followed suit on 
January 3, 2002, finding that ``the proposed project would enhance the 
inter-regional electric transmission infrastructure and improve the 
reliability and efficiencies of the electric system here in Connecticut 
as well as in New York.'' (Siting Council Decision and Order at 1.) As 
the Siting Council recognized, ``recent events have demonstrated that 
preparedness and cooperation [among the states] are in the best 
interest of the State, region, and the nation.'' Id.
    Then, in March 2002, the U.S. Army Corps of Engineers (``Army 
Corps'') and Connecticut Department of Environmental Protection 
(``DEP'') issued the necessary permits for CSC LLC to install the 
Project. The permits each included an identical condition that, within 
the Federal Navigation Channel (``Federal Channel'') in New Haven 
Harbor, the Project's cable system must be buried to a depth no less 
than the deeper of six feet below the seabed or 48 feet below mean 
lower low water. The reason for this requirement was to accommodate the 
possible future deepening of the Federal Channel by the Army Corps, 
although the Army Corps currently has no plans to deepen the Federal 
Channel. Significantly, the DEP and Army Corps permits each grant CSC 
LLC a period of years for the completion of all installation work for 
the CSC, including meeting the burial depth requirement.1 
For the areas outside the Federal Channel, the Army Corps and DEP 
permits required cable system burial depths of at least 4 feet and 6 
feet, respectively, below the seabed of the Sound.
---------------------------------------------------------------------------
    \1\ The DEP permit requires compliance with the permit conditions 
within 3 years from the date of issuance of the permit. The Army Corps 
has, by letter, authorized operation of the CSC for an indefinite 
period of time while CSC works in good faith to address the permit 
depth requirements.
---------------------------------------------------------------------------
    In May 2002, CSC LLC substantially finished installation of the 
cable system in accordance with its permits. However, when burying the 
cable system, CSC LLC encountered previously undiscovered hard 
sediments and bedrock protrusions along portions of the route within 
the Federal Channel. CSC LLC immediately notified DEP and Army Corps 
that it was unable to achieve the permitted burial depth in all 
locations. The CSC is buried to the permit depth along 98 percent of 
the entire span, and over 90% of the route within the Federal Channel 
to an average of 50.7 feet below mean lower low water, well below the 
required level of minus 48 feet.

IV. OPERATION OF THE CSC PROVIDES SIGNIFICANT AND SUBSTANTIAL BENEFITS 
                TO CONNECTICUT, NEW YORK AND THE REGION

A. The CSC Significantly Improves the Reliability of the Connecticut 
        and New York Grids
    Upon being energized pursuant to the Secretary of Energy's orders 
in the wake of the August 2003 blackout, the CSC assisted in restoring 
power to and stabilizing the transmission system in the northeastern 
United States. The Secretary's order allowed the CSC to transmit and 
deliver power and to provide critical voltage support and stabilization 
services to the transmission systems in Connecticut and New York.
1. Voltage Support for the Connecticut and Long Island Electric Grids
    Since September 1, 2003, the CSC has been operating with excellent 
consistency and has been recognized for its value in ensuring a 
reliable power supply in both Connecticut and New York.2 
ISO-New England (the independent operator of the New England 
transmission system) directs the operators of the CSC when to transmit 
power over the CSC and when to provide (simultaneously or separately) 
voltage support to the neighboring transmission systems. The inherent 
capability of the high voltage direct current cable system allows it to 
act immediately and automatically to help smooth out the aftershocks of 
electric system spikes and other disturbances in Connecticut and New 
York, which in turn lowers the risk of other transmission lines 
switching off and magnifying a system problem.
---------------------------------------------------------------------------
    \2\ ISO-New England, Inc. has stated that the CSC ``offers an 
overall benefit to New England'' because the facility is a ``valuable 
tool'' in case the system faces any additional system instability. 
Blackout Fails to Subdue Connecticut's Opposition to Activation of 
Cross Sound, Power Daily Northeast, August 20, 2003.
---------------------------------------------------------------------------
    While the CSC operated full time pursuant to the DOE order, CSC LLC 
responded to 108 requests by ISO-New England and 9 requests by the New 
York Independent System Operator (``NYISO'') to help maintain a steady 
operating voltage on the Connecticut and New York transmission systems, 
respectively. Importantly, the CSC's capability to respond to these 
grid operators' requests for voltage stabilization not only provides 
reliability benefit, but also provides environmental benefit, as it 
reduces the need to start up less efficient and dirtier power plants 
(including plants in New Haven) that would otherwise be needed to 
provide the same level of service.
    In addition to responding to requests by ISO-New England or NYISO 
to forestall anticipated difficulties, the CSC also responds 
automatically to unanticipated system disturbances. During operation 
pursuant to the DOE order, the CSC responded 18 times to reduce system 
disturbances caused by lightning strikes, transformer failures, 
transmission line faults and unknown events. Twelve of these responses 
(two-thirds) were to disturbances on the Connecticut grid.3
---------------------------------------------------------------------------
    \3\ In Connecticut, automatic CSC responses were on September 2, 
15, 23; October 1, 10, 14, 17, 31 (twice); January 6, February 3 and 
March 5. In New York, automatic CSC responses were on August 17, 
September 4, October 14, March 3 and 5, and May 3.
---------------------------------------------------------------------------
2. The CSC Provides Another Critical Path for Emergency Energy and 
        Reserves
    In addition to stabilizing the regional transmission system, the 
CSC has been used as an operating reserve in times of power scarcity. 
In fact, when Connecticut's energy supply was at dangerously low levels 
during an extreme cold spell in January 2004, the CSC was on standby at 
ISO-New England's request to export 200 megawatts over the CSC from 
Long Island to Connecticut. During this period, the CSC (while it did 
not ultimately have to export any power from New England to New York) 
remained on standby in anticipation of an order to transmit power from 
Long Island to Connecticut.
    Southwest Connecticut has been widely identified as one of the most 
transmission-deficient and capacity-constrained areas in the U.S. 
transmission system. Long Island has exported power to Southwest 
Connecticut many times in the past, including during the July 2, 2002 
heat wave, using the existing ``1385'' submarine cable between Norwalk, 
Connecticut and Northport, New York. Last fall, ISO-New England and 
NYISO coordinated a successful test that sent power from New England 
over the Cross Sound Cable to Long Island while simultaneously 
returning power from Long Island over the 1385 cable to Connecticut.
    Energy exports out of New England have no impact on the reliability 
of the New England system. In fact, ISO-New England will not schedule 
any exports out of New England if the transfer of such power would 
degrade the reliability of the New England system. Energy flows over 
the CSC are jointly controlled by the NYISO and ISO-New England under 
the same reliability rules applied to all other interconnections 
between New York and New England. Under those rules, energy flows over 
any transmission line will only occur if such flows do not jeopardize 
the electric system of the exporting region.
B. The CSC Provides Valuable Economic Benefits to Connecticut and New 
        York
    Operation of the CSC benefits Connecticut electricity consumers. 
The affidavit submitted to DOE by my colleague Dr. Raymond L. Coxe 
(attached as Exhibit JAD-3) provides a full discussion of the CSC's 
numerous economic and reliability benefits to Connecticut.
    Specifically, Dr. Coxe found that for the years of 2004 and 2005, 
the CSC is expected to provide reliability and economic benefits of 
approximately $40 million per year to electricity market participants 
in New York and New England.4 Failing to operate the CSC 
during this period would forego those benefits, thus unnecessarily 
increasing costs to consumers in both regions. In any evaluation of the 
public interest regarding the operation of the CSC, the potential loss 
of these benefits must be considered. Clearly, the public interest 
benefits of the continued operation of the CSC are tangible and 
substantial.
---------------------------------------------------------------------------
    \4\ This figure does not include the cost of emergency generating 
facilities that LIPA has announced will be required to replace the 
power transmitted by Cross Sound Cable this summer.
---------------------------------------------------------------------------
    Independent analyses of the impact of discontinuing operation of 
the CSC confirm our internal analyses. On October 24, 2003, one of the 
world's leading energy research and consulting firms, Cambridge Energy 
Research Associates (``CERA'') published an analysis on the impact of 
the CSC. This report, CERA Alert: Effect of the Cross Sound Cable, 
describes CERA's simulation of the operation of the electricity markets 
in Connecticut and Long Island for 2004 and 2005, for the following two 
cases:

 A Base Case which reflected the operation of the CSC during those 
        years; and
 A Change Case in which the CSC was not available for operation.
    In these simulations, CERA used the same base case assumptions that 
CERA is using for its other work on transmission congestion and 
generation asset valuation.
    The CERA Alert summarizes CERA's analysis of wholesale electricity 
market prices in Connecticut and on Long Island. The CERA Alert notes 
that failure to continue operation of the CSC would raise average 
annual wholesale spot electricity prices on Long Island by between 4% 
and 5%, with no corresponding reduction in average annual wholesale 
electricity prices in Connecticut.
    Regulatory agencies with direct responsibility and jurisdiction 
over the CSC have recognized the significant economic benefits to 
Connecticut provided by the CSC. These independent agencies include the 
Connecticut Siting Council, the FERC, and the NYPSC.
    The Connecticut Siting Council, after a full consideration and 
review, unanimously concluded that the CSC would provide a public 
benefit to Connecticut. Specifically, the Siting Council found that 
``the wholesale price of electricity in New England should not increase 
with the export of up to 330 MW of electricity from Connecticut to Long 
Island.'' (Findings of Fact No. 23). The Siting Council further found 
that the CSC ``could increase the competition and markets available to 
electric generators in New England and Long Island'' (Findings of Fact 
No. 15) and that ``an open competitive market for electricity, enhanced 
by the increased capability for trade [provided by the CSC], will 
result in increased private investment in infrastructure, and lower 
electricity costs for the region.'' (Siting Council Decision and Order 
at 1.)
    Further evidence of the CSC's benefits to Connecticut is the FERC's 
approval of the CSC. In its order approving rates for the CSC, FERC 
stated that the CSC ``enhances competition and market integration by 
expanding capacity and trading opportunities between the New England 
and New York markets.'' (FERC order at 7.) FERC further found that the 
CSC ``will provide benefits to electric consumers and producers in both 
markets while imposing no risk or cost on captive customers in any 
market.'' Id.

  V. OPERATION OF THE CSC HAS NO ENVIRONMENTAL OR NAVIGATIONAL IMPACT

A. Agency Findings of No Harm to Operate Cable As Is
    Both Federal and State agencies have confirmed that operation of 
the CSC ``as is where is'' neither causes any harm to the environment 
nor poses any threat to navigation. Specifically, neither the Army 
Corps nor the DEP have raised any environmental or substantive 
objection to operating the CSC at its current depth. DEP itself 
describes its objection as procedural, driven by a concern about the 
scope of Connecticut's legislative moratorium on Long Island Sound 
energy projects, not by environmental issues.
1. Army Corps Finding of No Harm to Environment or Navigation
    The Army Corps has determined that operation of the cable as 
installed would cause no environmental harm or interference with 
navigation. Accordingly, the Army Corps has expressly authorized 
operation of the CSC while CSC LLC continues work toward attaining the 
required depth.
    On December 30, 2002, the Army Corps issued a letter to CSC LLC 
confirming that operation would not pose navigational or environmental 
harm and stating that the Army Corps had no objection to present cable 
operation at the current depth while CSC LLC sought to work with the 
DEP to obtain necessary approvals to reach the authorized depth. The 
letter stated:
          The Corps of Engineers, in consultation with National Marine 
        Fisheries Service, has determined that there will be no undue 
        short-term environmental harm or interference with navigation 
        with the cable in its present location until full burial depth 
        can be achieved. Since you are working in good faith to reach 
        the required burial depth, the Corps of Engineers has no 
        objections to you operating the cable at this time.
2. DEP Finding of No Threat to Fisheries Resources from Operation at 
        Present Depth
    The DEP made a similar determination of no environmental harm from 
operation of the cable system as installed. Shortly after CSC LLC 
notified DEP that the cable could not buried to the permitted depth in 
a few locations, DEP Commissioner Arthur J. Rocque responded in a June 
13, 2002 letter to a letter from Richard Blumenthal, Attorney General 
of Connecticut, by placing the environmental impacts in appropriate 
perspective and expressing his concern about the ``published rhetoric'' 
about such impacts:
          I would be remiss if I did not note my disappointment in your 
        characterization of the impacts associated with both the 
        installation of the cable and the failure to attain greater 
        depths in part of the federal channel as serious, critical and 
        devastating environmental impacts . . . From an environmental 
        perspective, this cable project pales in comparison to even 
        maintenance dredging of the federal navigational channel in New 
        Haven Harbor ...[P]ublished rhetoric has eclipsed facts on this 
        project, at least from an environmental impact standpoint.
    However, in contrast to the Army Corps, the DEP stated that, as a 
matter of procedure, it would not permit operation of the CSC while CSC 
LLC was endeavoring to meet the burial depth requirements. Nor would 
the DEP permit CSC LLC to work to meet the burial depth requirement. 
According to the DEP, the Connecticut legislative moratorium on agency 
consideration of proposed crossings of Long Island Sound by utility 
projects (including interstate transmission lines) prevents DEP from 
allowing CSC LLC (by permit modification or by new permit) either to 
continue working to meet the burial condition or to allow operation of 
the CSC in its current location--effectively denying CSC LLC any 
recourse to the gradual loss of its permit rights. The CSC had by this 
time become a highly politicized project in Connecticut. As a result, 
while construction was completed and there remained no substantive 
objections to operation of the CSC, the CSC had not operated for an 
entire year until directed to do so by DOE's post-blackout orders.
3. Chronology of Correspondence with DEP and Specific DEP Findings
    On July 22, 2002, the DEP wrote to CSC LLC stating that while cable 
system operation was not specifically within its jurisdiction, the 
environmental impact of operation was within its jurisdiction. The DEP 
therefore requested additional information about the environmental 
impact of operation as installed. The DEP also confirmed that the cable 
system's current location did not constitute a permit violation because 
the permit's installation work period to achieve the authorized depth 
had not yet expired (and does not expire until March 17, 2005). CSC LLC 
responded to the DEP by letter dated July 24, 2002, with supporting 
documentation demonstrating that operation at the current depth would 
pose no adverse environmental or navigational risks.
    On November 18, 2002, CSC LLC submitted a request to DEP to further 
bury the cable system to the required depth in the several locations 
within the Harbor where the cable system did not rest on rock, by using 
alternate installation tools and methods. On December 23, 2002, the 
Director of the DEP Office of Long Island Sound Programs (``OLISP'') 
denied CSC LLC's request to further bury the cable system to the 
permitted depth but responded to CSC LLC's July 24, 2002 report of no 
impacts from operation in the current location. In its response, DEP 
agreed with the demonstration in CSC LLC's July 24, 2002 letter with 
respect to environmental impacts, and specifically that the 
electromagnetic field (``EMF'') and temperature variations associated 
with operation at the current depths ``would not be expected to impact 
fisheries resources.'' The DEP stated that the permit depth requirement 
was specified by the Army Corps as the requisite depth to accommodate 
navigational concerns and deferred to the Army Corps regarding those 
concerns.
    On January 6, 2003 DEP wrote to CSC LLC that: ``[w]hile we may not 
have any environmental concerns with the operation of the cable in its 
current condition, we do have significant procedural concerns.'' The 
DEP objected to operation during the time required for the CSC to reach 
authorized depth in those limited areas where the cable system requires 
further burial. The DEP's objection is based on its interpretation of 
the depth requirement of its permit as prohibiting operation of the 
cable system at any other depth, notwithstanding the absence of 
environmental harm from operation. The DEP referred to this barrier to 
operation of the cable system in its current location as a 
``procedural'' obstacle to operation and has informed CSC LLC that a 
new permit would be needed in order for CSC LLC to operate before 
further burial work is performed. Furthermore, under Connecticut's 
moratorium, DEP is precluded from considering any new permits for 
energy projects crossing Long Island Sound.
B. Post-Installation Monitoring Studies Indicate No Significant Impact
    Pursuant to the conditions of state and federal permits for the 
CSC, a survey program was developed to monitor the sea bottom under New 
Haven Harbor and Long Island Sound in connection with the cable 
system's operation. Survey procedures were developed in conjunction 
with the Army Corps, DEP, the National Marine Fisheries Service, and 
the Connecticut Bureau of Aquaculture. The program consists of four 
monitoring surveys, at 6 months, 12 months, 18 months and 30 months 
after initial cable system installation in May 2002. The first two 
surveys, conducted in fall 2002 and spring 2003, were reviewed by 
Charles H. Evans, the Director of DEP's Office of Long Island Sound 
Programs, who stated: ``what we are seeing is within the range we had 
expected, which are really very minor effects.'' 5
---------------------------------------------------------------------------
    \5\ ``Cross-Sound Cable Effects Unclear'', Hartford Courant Online 
(ctnow.com), November 22, 2003.
---------------------------------------------------------------------------
    The 18-month survey, conducted in November and December 2003, was 
the first survey performed during cable system operation. The report 
with the results of this survey is attached to my testimony as Exhibit 
JAD-4. This report concludes that the installation and operation of the 
CSC has resulted in only minor and short-term effects on bottom-
dwelling organisms. More specifically, the recently released report 
includes scientific data and analysis demonstrating that:

 Cable system installation effects to living organisms within the Long 
        Island Sound seabed and floor of the New Haven Harbor Federal 
        Navigation Channel (``benthic habitats'') have been short-term 
        and very minor;
 Benthic habitats in many places within the cableway have returned to 
        the same conditions observed prior to cable system laying;
 There are no significant differences between seabed images of benthic 
        habitats located within and outside the cable system embedment 
        area;
 The six benthic habitats detected during the pre-installation surveys 
        within the five study areas continue to exist with no 
        significant changes;
 The single area of actively farmed shellfish beds traversed by the 
        cable system (for a length of 707 feet) continues to 
        demonstrate high benthic quality;
 The variation of measured magnetic fields with the CSC operating has 
        remained the same since the initial pre-installation monitoring 
        survey; and
 There is no evidence to suggest that the presence of the cable system 
        will affect commercial vessel navigation on the water surface 
        since there has been no detectable change in the compass 
        measurements collected.
    A May 13, 2004 study released by the Bureau of Aquaculture of the 
Connecticut Department of Agriculture summarizes their pre- and post-
installation shellfish analysis program within New Haven Harbor. The 
Bureau of Aquaculture report suggests that the cable system 
installation, among other possible sources during the same time period 
such as effects from parasites or shellfish spawning processes, 
potentially affected some of the sampling population. Post-installation 
samples also indicate that these effects have since subsided. The 
report does not take into consideration, however, the significant 
effects of sediment dispersed by the first stage (Winter 2002-2003) of 
the major maintenance dredging project conducted by the Army Corps that 
took place between the Bureau of Aquaculture's sampling stages. This 
Bureau of Aquaculture report, along with the benthic monitoring 
studies, further confirms that the effects of the cable system 
installation have been minor and short-lived.
C. New Haven Harbor Maintenance Dredging Completed over Cable System
    Further evidence of the CSC's lack of impact on navigational needs 
in New Haven Harbor is provided by the Army Corps' recently completed 
maintenance dredging of the Federal Channel, the first such dredging 
performed in over a decade. This dredge project took place in stages 
over the past two winters and required the mechanical dredging of over 
650,000 cubic yards of sediment from the Federal Channel and its side 
slopes. At the same time, several facilities along the harbor coastline 
are dredging out their berths to remove another 80,000 cubic yards of 
sediment.
    CSC LLC worked very closely with the Army Corps while dredging 
activities were accomplished near and directly above the cable system 
in several locations, including dredging over the section of cable 
resting atop unforeseen bedrock. At no time did the cable system pose 
an obstacle to the dredging, or prevent authorized channel depths from 
being restored. While this dredging took place, the CSC was fully 
available and continued to operate under the direction of ISO-New 
England. CSC LLC appreciated the opportunity to contribute to this 
successful Army Corps dredge project, and is pleased with the 
confirmation that the cable system poses no impediment to the 
maintenance of this important shipping lane.
    According to the Army Corps permit application to the DEP, dredging 
the Federal Channel affected approximately 157 acres of the harbor 
bottom. By way of comparison, that area is thirty-one times greater 
than the approximate 5 total acres affected by installation of the 
cable system. In addition to the much smaller area of impact, 
installation of the CSC's cable system was performed by means of a 
minimally intrusive low-impact water jetting tool, which placed the 
cable system to an average depth of over 10--feet beneath the channel 
seabed, rather than a mechanical dredge using a large clamshell bucket.

VI. CONNECTICUT'S ``CATCH-22'' EFFECTIVELY BLOCKS OPERATION OF THE CSC 
WITHOUT REGARD TO THE PROJECT'S SUBSTANTIAL BENEFITS, LACK OF IMPACTS, 
            AND CSC LLC'S RIGHTS UNDER THE PROJECT'S PERMITS

A. CSC LLC Has Made Repeated Requests to DEP to Either Further Bury or 
        Operate the CSC
    CSC LLC has submitted five (5) separate proposals to DEP to either 
bury the cable to its permitted depth or operate the CSC in its current 
location with no environmental impact. Despite acknowledging the lack 
of environmental impacts from operation, DEP has refused to let CSC LLC 
either bury the cable system deeper or operate, thus creating the 
classic ``Catch 22'' situation in which CSC LLC finds itself, as 
outlined below. Connecticut enacted legislation specifically targeted 
to prevent CSC from complying with its permits and block the Project 
from operating. While preventing CSC LLC from complying with or seeking 
waiver from its permits, Connecticut contemporaneously authorized a 
major dredging project in the same harbor (New Haven) with 
exponentially larger environmental impacts, and supports a plan to dump 
dredge spoils in Long Island Sound.
1. Connecticut's Moratorium on Energy Projects Crossing Long Island 
        Sound
    In the spring of 2002, while the Connecticut Attorney General's 
appeal of the Siting Council approval of the CSC was pending (and 
ultimately dismissed), the Connecticut legislature passed Public Act 
02-7 (``P.A. 02-7''), which enacted a moratorium on the consideration 
of new applications for electric transmission cables and gas pipelines 
crossing the Sound and, moreover, retroactively voided permits already 
granted for electric transmission cables (but not gas pipelines) that 
had not yet been installed--which was Cross Sound Cable's situation at 
that time. The class of entities affected by the retroactive provision 
was a class of one: Cross Sound Cable. The Governor of Connecticut 
vetoed P.A. 02-7 on April 19, 2002, recognizing in his formal veto 
message the grave constitutional infirmities of ``unfairly penaliz[ing] 
a company that has followed the [agency approval] process set up by the 
General Assembly.'' (April 19, 2002 veto message at 2.) The legislature 
sustained the veto on April 24, 2002.
    The legislature then revised the vetoed act and passed a new bill, 
now Public Act 02-95 (``P.A. 02-95'' or the ``Moratorium Law''). The 
Governor signed P.A. 02-95 on June 3, 2002, and the law went into 
effect on that date, after CSC LLC had obtained all necessary permits 
to install and operate the cable, and after its initial burial of the 
cable was completed on May 28, 2002. The Moratorium Law forbade state 
agencies from ``consider[ing] or render[ing] a final decision for any 
applications relating to electric power line crossings, gas pipeline 
crossings or telecommunications crossings of Long Island Sound'' for 
one year from the effective date of the statute, during which period a 
task force was to complete a comprehensive environmental assessment and 
plan. The law provided that after the task force completed its work, 
``[a]ny application for an electric power line . . . crossing of Long 
Island Sound that is considered by any state agency'' is to be 
additionally evaluated based on the results of the task force's study. 
The task force released its report on June 3, 2003--the day the 
moratorium was set to expire.
    On June 26, 2003, Connecticut enacted legislation that extended the 
original one-year duration of the moratorium another full year to June 
2004. In September 2003, subsequent to the energization of the CSC 
pursuant to the Secretary of Energy's orders after the August 14, 2003 
blackout, Connecticut Governor Rowland called for an evaluation of the 
impacts of operating the CSC in its present location. DEP responded on 
October 31, 2003 by issuing a request for proposals from consulting 
firms to provide an evaluation of the impacts of operating the CSC in 
its present location. The deadline for responses to this solicitation 
was December 2003; however, to our knowledge DEP has yet to select a 
consultant to perform this evaluation.
    Finally, just this month (May 5), the Connecticut legislature again 
extended the moratorium by another full year, to June 2005. The 
Connecticut legislature approved extension of the moratorium is spite 
of the opposition from both the DEP and the Connecticut Department of 
Public Utility Control (``DPUC''). In testifying on the effects of 
extending the moratorium on March 12, 2004, DEP Commissioner Rocque 
indicated that as both Chairman of the Connecticut Energy Advisory 
Board (``CEAB'') and DEP Commissioner, both DEP and CEAB opposed 
extension of the moratorium. Chairman Downes of the DPUC further 
testified:
          I'd like to stress to you in the strongest possible terms 
        that a continuing moratorium here is--has very bad effects, it 
        has immediately bad electrical effects, it has immediately bad 
        financial effects, and over the long term, we'll lose any 
        opportunity at all to control these issues.
(Transcript of March 12, 2004 public hearing before the Environment 
Committee of the Connecticut General Assembly, page 16.)
2. CSC LLC's Petitions to DEP
    The permits issued by the DEP and the Army Corps grant CSC LLC a 
period of time to complete installation work. CSC LLC has submitted a 
total of five separate requests to either perform further burial work 
or operate the CSC in its present location. DEP has rejected four of 
these petitions, and has not acted on CSC LLC's fifth request for 
almost one year.

 REQUEST #1: On November 18, 2002, CSC LLC submitted a request to DEP 
        to bury the cable to the required depth in the several 
        locations within the Federal Channel where the cable system did 
        not rest on bedrock, using installation techniques appropriate 
        for those locations. In its letters dated December 23, 2002 and 
        January 6, 2003, the DEP interpreted the Moratorium Law as 
        prohibiting the agency from issuing a decision on an 
        application to modify the permit conditions. On January 6, 2003 
        DEP reiterated that ``[w]hile we may not have any environmental 
        concerns with the operation of the cable in its current 
        condition, we do have significant procedural concerns.''
 REQUEST #2: On January 15, 2003, CSC LLC filed a request with the DEP 
        to modify its DEP permit to allow operation of the cable in its 
        current location without any additional environmental impact 
        from further construction or from cable operation, while CSC 
        LLC completed a work plan and obtained necessary authorizations 
        to reach the required burial depth during the life of the 
        permit. That modification would harmonize the permit with the 
        position of the Army Corps, which had stated no objection to 
        operation in these circumstances. While CSC LLC believed that 
        the DEP could grant this request under the existing permit 
        terms, without applying for a certificate of permission 
        (``COP''), CSC LLC included with its request the forms to 
        obtain a COP under Conn. Gen. Stat.  22a-363b, which, among 
        other things, allows the DEP to approve ``minor alterations or 
        amendments to permitted activities consistent with the original 
        permit.'' DEP again rejected CSC LLC's request by issuing a 
        letter on January 17, 2003 stating that a COP would be needed 
        for CSC LLC to obtain the requested permit modification but 
        that the Moratorium Law prevented the DEP from considering or 
        deciding the merits of an application for a COP relating to a 
        utility crossing of the Long Island Sound.
 REQUEST #3: On May 23, 2003, CSC LLC filed a new request with DEP to 
        modify its permit to allow operation at the current burial 
        depth while CSC LLC worked with DEP and the Army Corps to 
        address the permanent burial depth requirements. On June 2, 
        2003, on the day before the first moratorium expired, DEP 
        notified CSC LLC that it could not consider this application, 
        citing the first Connecticut moratorium and imminent enactment 
        of the second moratorium. On June 11, 2003, just after 
        expiration of the first moratorium and before enactment of the 
        second moratorium, DEP denied this application on the grounds 
        that operation of the CSC as is, even without any further 
        environmental impacts, could not be considered a ``minor 
        alteration'' of the original permit.
 REQUEST #4: On June 10, 2003, upon expiration of the first 
        Connecticut moratorium, CSC LLC filed a new request to DEP to 
        modify its permit to allow operation of the CSC while CSC LLC 
        continued to work with DEP and the Army Corps regarding the 
        burial depth issue. On June 13, 2003, just after expiration of 
        the first moratorium and before enactment of the second 
        moratorium, DEP denied this request on the grounds that 
        operation of the CSC as is, without any further environmental 
        impacts, still could not be considered a ``minor alteration'' 
        of the original permit--despite expiration of the first 
        moratorium.
 REQUEST #5: Finally, on June 12, 2003, in response to DEP's 
        suggestions in its rejection of CSC LLC's May 23rd application 
        (Request #3 above), CSC LLC filed a new permit application with 
        DEP to allow operation of the CSC until December 31, 2007, 
        while CSC LLC continued to work with DEP and the Army Corps 
        regarding the burial depth issue. DEP has acknowledged receipt 
        of this application but to date has taken no action, a period 
        of almost one full year.
    This continued pattern of rejection and delay by DEP demonstrates 
that CSC LLC is simply not being afforded a fair opportunity to either 
further bury the cable system or demonstrate that a waiver of the 
burial condition, and allowing operation ``as is where is,'' creates no 
impact to the environment or navigation.

                            VII. CONCLUSION

    CSC LLC was surprised with Secretary Abraham's decision to rescind 
his order authorizing operation of the Cross Sound Cable. As a result, 
the CSC's many benefits to Connecticut, New York, and the region are no 
longer being realized. The substantial economic benefits and improved 
reliability provided by the CSC come at no cost to Connecticut and 
without any harm to the environment or threat to navigation in New 
Haven harbor or elsewhere in Long Island Sound. Instead of enjoying the 
CSC's benefits to Connecticut, Connecticut insists on maintaining a 
``Catch-22'' under which Connecticut precludes operation of the CSC on 
the grounds that certain permit conditions have not been met (despite 
acknowledging the lack of impacts from operation) while at the same 
time refusing to consider CSC LLC's requests to either comply with or 
waive the subject permit conditions. I respectfully urge the 
Subcommittee to address this situation by approving legislation that 
allows the CSC to resume full commercial operation and provide its 
substantial benefits to Connecticut, New York and the Northeast.

    Mr. Hall. Thank you.
    Mr. Kessel, purchaser of power, we recognize you for 5 
minutes.

                   STATEMENT OF RICHARD KESSEL

    Mr. Kessel. Thank you, Mr. Chairman. And we thank you on 
behalf of not just Long Island Power Authority and our 
customers, but also on behalf of Governor Pataki for taking the 
time to look at an issue which I think we all recognize is an 
issue that is not confined to New York and Connecticut, but a 
national issue.
    It seems that we have all forgotten the blackout of last 
summer when the Northeast and parts of Canada experienced the 
greatest power failure in our history. And in an environment 
when we are less than a year from that blackout, and an 
environment where terrorism has constantly reminded us about 
the infrastructure and the vulnerability of the infrastructure, 
and threats against the electric grid is one of them, to allow 
a perfectly normal transmission line to lie not used at the 
bottom of the Long Island Sound is absolutely preposterous and 
is really parochial politics and nothing more. That is what 
this issue is all about.
    And in listening to the testimony, I think it is important 
to make some critical points here. No. 1, this is not about a 
cable being illegal. The opposition from my friend, the 
Attorney General Blumenthal in Connecticut, and others appeared 
before the cable was even built. This is not about the 
permitting conditions. This is really about parochialism and 
false environmentalism. I think there is no one who has a 
better record on environmental protection than our State, New 
York State, under the leadership of Governor Pataki.
    I think it is important to just go through the arguments 
that have been made by Attorney General Blumenthal and others 
in Connecticut and point out the hypocrisy of some of them. The 
environmental argument--there is no environmental harm from 
that cable. That cable has operated, thanks to the Department 
of Energy's emergency order, since last August and was only 
recently shut down. And I have challenged the State of 
Connecticut and the Attorney General to show what environmental 
or navigational harm that cable has created in the 8 or 9 
months that it has operated. It hasn't created any 
environmental harm whatsoever.
    I thought, since we have been talking about it all morning, 
that I would bring several sections of the cable, and I would 
like to share this with the committee. If this could be put in 
the record, I think it should, because this is what we are 
talking about. So maybe we can pass this up in some way, and 
you can take a look at the cable yourself.
    And I would also like to give a piece of the cable to my 
friend Attorney General Blumenthal. I would like him----
    Mr. Blumenthal. I have received it before. So this kind of 
gamesmanship is what it is.
    Mr. Kessel. It is not gamesmanship. This is the cable, Mr. 
Attorney General. I would like you to show us after my time 
period is up, based upon the fact that this is solid in nature, 
can't leak at all, I would like you to show us with this piece 
of cable what the environmental harm is as compared to the 
dumping of dredging materials that you are silent about from 
the State of Connecticut. When there is an environmental issue 
that impacts the State of Connecticut you are strangely silent, 
but when it is an environmental issue regarding the Cross-Sound 
Cable, you lead the charge.
    As I indicated the other day, I challenge you to create the 
same opposition to the dumping of sludge, which takes up 
approximately 4\1/2\ square miles of the Long Island Sound as 
opposed to the .027 square miles that are impacted by the 
faults in the cable. Either you love the Long Island Sound and 
you care for it, or you don't. Your silence, frankly, on the 
dumping of sludge in light of your opposition to the cable, 
frankly, to me is astonishing. There is no environmental damage 
to the sound. And that is not just something that we are making 
up here, but it has been found not only by New York and 
Connecticut, by the Army Corps of Engineers and everyone else. 
There are no environmental problems. There are no navigational 
problems.
    Second of all, I constantly hear that Long Island hasn't 
done anything. Well, that is not true. As the chairman of the 
Long Island Power Authority, I can tell you that we have 
installed 50 new small power plants across our service 
territory over the last 3 years, equating to 600 megawatts of 
new on-island generation. Additionally, we have spent between 
$35 and $40 million a year on energy efficiency and demand-side 
reduction programs, and next week we will be announcing a long-
term energy plan to add 1,000 megawatts of new electricity for 
Long Island over the next 7 to 10 years.
    I think it is important to note that when you look at what 
Connecticut has added and subtracted to its energy supply, it 
is less than what we have done on Long Island in the last 10 
years. In fact, since 1994 through 2004, Connecticut, net--when 
I say net, that is adding and subtracting, because they have 
decommissioned a number of plants in Connecticut--the net added 
impact of megawatts in the entire State of Connecticut is 621 
megawatts. Our additions on Long Island net 863 megawatts. So 
when you talk about Long Island not doing anything for itself, 
the bottom line is that Long Island has added more megawatts 
than the entire State of Connecticut combined in the last 10 
years.
    Finally, the issue of rates going up is just a specious 
argument. The fact is that the Cross-Sound Cable would not just 
benefit Long Island, but would benefit Connecticut, and 
particularly southwest Connecticut where there is a tremendous 
congestion problem.
    We have already indicated, Mr. Chairman, that we could take 
electricity from Connecticut, bring it down the Cross-Sound 
Cable, across Long Island, and up the 1385 line that Attorney 
General Blumenthal mentioned into southwest Connecticut. That 
would not only help in the event of potential problems this 
summer, which everyone recognizes could occur, but also would 
reduce congestion charges in that part of the State and 
ultimately, obviously, benefit the people of Connecticut.
    So let me conclude by urging this committee that you must 
get involved. The Cross-Sound Cable is a symbol of what is 
wrong in this country, with the reliability of the electric 
grid. It shouldn't have to take another blackout for us to 
remind ourselves of what happened last summer and of what 
customers go through whether they are in Connecticut, Long 
Island or California when the lights go out. So I urge 
congressional action on this matter, quickly and appropriately, 
in time for the summer season. Thank you.
    [The prepared statement of Richard Kessel follows:]

  Prepared Statement of Richard Kessel, Chairman and Chief Executive 
                  Officer, Long Island Power Authority

    My name is Richard M. Kessel and I serve as Chairman of the Board 
and Chief Executive Officer of Long Island Power Authority (LIPA) 
located on Long Island in New York State. As an instrumentality of the 
State of New York and a public power agency, the Authority and its 
operating subsidiary, provide electric service to nearly 1.1 million 
customers, representing approximately 2.8 million people in Nassau and 
Suffolk counties, and the Rockaway Peninsula in the Borough of Queens, 
New York City.
    I am here today to deliver the message that electricity must flow 
freely on the interconnected interstate transmission grid, not only to 
benefit Long Island and New York, but Connecticut and New England as 
well. Every region of the country needs to provide the resources 
required to meet the needs of our citizens for electric energy. Those 
resources include generation from renewable and non-renewable 
resources, conservation and sustainable sources. However, no region of 
this country can develop and sustain those resources and meet those 
needs in isolation. The strength of our nation's system has been the 
interconnected grid and the sharing of resources for the common good of 
all. New York and greater New England believe that we should be 
supporting each other as the hot summer weather approaches and the 
Cross Sound Cable is an essential element of that support.
    I want to thank Chairman Hall for calling this hearing and for 
providing me with the opportunity to testify. I also would like to 
thank the Chairman of the full Committee, Chairman Barton, for his 
leadership on the issues facing our electric transmission system and 
overall reliability and his continuing interest in the Cross Sound 
Cable.

 THE BLACKOUT OF 2003--LIPA'S RESPONSE AND THE ENERGIZING OF THE CROSS 
                              SOUND CABLE

    Last summer LIPA and its customers were caught up in the Northeast 
power blackout, which affected much of the Northeast United States and 
Southeastern Canada. Through the cooperation of LIPA's customers, who 
limited their demand, and the committed work of the employees of LIPA 
and our service contractor, KeySpan, over 80% of LIPA's customers had 
their power restored by 8:30 A.M. on August 15th, and all customers had 
electric service restored within 25 hours, 21 minutes of the blackout. 
That restoration was expedited by the energization of the Cross Sound 
Cable on the night of August 14 and 15 pursuant to the emergency order 
issued by the Department of Energy. Governor Pataki's initiative in 
requesting that emergency order was met with immediate response by the 
Department of Energy. The Cross Sound Cable not only provided for the 
delivery of electric power to Long Island, it helped prevent the type 
of re-occurring rolling blackouts on August 15th that is often typical 
of restoration of service after a widespread outage.
    It was unfortunate that the Cable was not in service on August 14, 
2003, as it might have helped ameliorate the extent of the outage on 
Long Island and played in a role in restoring service even faster.
    In the aftermath of the Blackout and the uncertainty about its 
causes or possible recurrence, the Secretary issued a second order on 
August 28, 2003 that recognized that the emergency situation caused by 
shortages of power generation, transmission and distribution facilities 
continued to exist, and directed the continued operation of the Cross 
Sound Cable until such time the emergency was over.1 The 
benefits of that order have been proven in the following nine months of 
operation, not only because of the electric energy transmitted between 
Long Island and Connecticut but also because the Cable has been called 
upon more than one hundred times to meet critical reliability needs. In 
fact, the Cable was called upon for stability purposes more often in 
New England than in New York.
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    \1\ In his August 28 Order, the Secretary stated that ``an 
emergency continues to exist in the Northeast United States due to a 
shortage of electric energy, a shortage of facilities for the 
generation of electric energy, a shortage of facilities for the 
transmission of electric energy and other causes.''
---------------------------------------------------------------------------
    In short, there was a lack of necessary resources in the region 
that could ensure the safe and reliable delivery of power in the 
northeast U.S. This was the underlying emergency addressed by the 
Secretary. From August 15, 2003 until May 7, 2004, the Cross Sound 
Cable operated under the Secretary's emergency order. Unfortunately, on 
May 7th, the Secretary rescinded his emergency order without notice. 
This decision will have significant negative impacts on the reliability 
and supply of electricity on Long Island, in Connecticut and throughout 
the region. While the blackout was a singular unprecedented event, the 
fact remains that our national electric transmission system needs 
significant improvement, and that we need to continue our efforts to 
enhance system reliability by expanding and improving the transmission 
system capabilities and interconnections.
    Despite the significant growth in resources over the last six 
years, the Cable is an essential part of Long Island's resource 
picture. LIPA is taking aggressive steps to maintain and enhance the 
electrical system on Long Island. However, ultimately, the answer is 
clear--we need the Cross Sound Cable operating today and in the future. 
Electricity is supposed to be a fungible interstate commodity. The 
electricity grid does not recognize ``Connecticut electrons'' or ``New 
York electrons.'' Electricity is supposed to flow over the interstate 
electric grid without regard to political boundaries. That is not what 
is happening here and, as a result, this situation is a poster child 
for federal intervention.
    I refer you to my testimony of September 4, 2003 for a history of 
the development of the Cross Sound Cable. Mr. Donahue's testimony today 
also describes the Cable in great detail, including the reliability 
benefits it provided during the term of the recently expired emergency 
order. Needless to say, the short operating history of the Cable during 
the Emergency Order more than justified LIPA's vision when it 
commissioned a study of the project for benefits to both Long Island 
and New England.
    Congress has recognized that the Cross Sound Cable is an essential 
component in the Northeast transmission grid by including in H.R. 6, 
the Energy Policy Act of 2003, a provision that would require the Cross 
Sound Cable to remain energized until Congress determines that it 
should be shut down. While that legislation remains in an uncertain 
state in the Senate, we believe this is sound policy.

      LIPA--PROVIDING RELIABLE ELECTRIC SERVICE AND INVESTING IN 
                             INFRASTRUCTURE

    We at LIPA are committed to doing whatever we can to create more 
stability in the transmission grid and provide reliable service to the 
people of the Northeast. The Authority and its operating subsidiary, 
LIPA, own and operate the transmission and distribution system on Long 
Island while also providing retail electric service to customers on 
Long Island. LIPA was established in 1986 by the New York State 
legislature to resolve a controversy over the Shoreham Nuclear Power 
Plant and to achieve lower utility rates on Long Island. Created as a 
corporate municipal instrumentality of the State of New York, the 
Authority was authorized under its enabling statute to acquire all or 
any part of the securities or assets of the Long Island Lighting 
Company (LILCO). In May 1998, thanks to the leadership of Governor 
Pataki, the Authority acquired LILCO as an operating subsidiary. This 
acquisition resulted in an average across-the board rate reduction of 
20% to the LIPA's customers in Nassau and Suffolk counties, and the 
Rockaway Peninsula in Queens.
    LIPA owns 1,344 miles of transmission and sub-transmission lines 
that deliver power to 175 substations in its electric system. From 
these substations, 13,075 circuit miles of distribution lines deliver 
the power to nearly 1.1 million business and residential customers, or 
a population base of nearly three million people.
    On average, for the past several years, our peak demand has grown 
at a rate of approximately 100 megawatts (MW) per year. On a per-
household basis, average residential consumption has increased 14% over 
the last five years, despite LIPA's varied and aggressive conservation 
and energy efficiency programs. The 2004 peak load forecast, approved 
by the NYISO for the Long Island Control Area (which includes both LIPA 
load and resources, load served by municipal utilities and generation 
resources not under contract to LIPA) is 5062 MW. The supply available 
to Long Island from generating resources on the island and the Y-49 and 
Y-50 cables is 5083 MW (measured in terms of installed capacity). The 
5062 MW load forecast assumes ``normal'' weather conditions. LIPA's 
record summer peak, set on July 29, 2002, is 5059 MW. If the summer of 
2004 proves to be as warm as 2002, the peak load is forecast at 5219 
MW, an increase in the peak of 160 MW over 2002. In fact, if the 
extreme weather conditions (97F and THI in excess of 83, fifth 
consecutive day of heat) that occurred in early July 1999 were to occur 
during the summer of 2004, a peak of over 5700 MW is expected. While 
load reduction programs may reduce this number by 100 MW, at this load 
level, extreme emergency measures will be required. It is informative 
to note that the actual July 1999 peak is no longer among the 15 
highest Long Island summer peaks. The conditions discussed above would 
eliminate any reserve margin even assuming, unrealistically, that all 
equipment is available.
    In order to maintain reliability and serve this growing market, 
LIPA has invested heavily in transmission infrastructure over the past 
six years, and will continue to do so. Since 1988, LIPA has invested 
$1.01 billion in our transmission and distribution (T&D) system. We 
have invested in a wide range of projects including new transmission 
and distribution lines, upgrades of existing lines, new substations, 
and improvements to existing substations. In addition, LIPA worked to 
establish a new interconnection between New York and New England across 
Long Island Sound--which ultimately became the Cross Sound Cable 
project. LIPA believed, and continues to believe, that development of 
this interconnection is essential to the reliability of Long Island and 
the inter-related region. I will not go in to greater detail on all of 
LIPA's investments and initiatives targeted at increasing reliability 
of the electric transmission grid now, but will refer you to my 
testimony given to the full House Energy and Commerce Committee on 
September 4, 2003.
    To address future needs and growth of this area, LIPA has developed 
and issued a Draft Energy Plan for Long Island. LIPA is recognized as a 
leader in conservation and efficiency measures--promoting conservation, 
installing of new energy efficient lighting and appliances, and using 
energy efficient technologies and renewables such as geothermal heat 
pumps and photovoltaics--with the implementation of a five-year, $170 
million Clean Energy Initiative. However, even with all of these 
efforts, it is not possible to meet all of our load requirements 
without a key component of our strategic plan--the Cross Sound Cable.
    Officials in the State of Connecticut have argued that Long Island 
should develop additional generation resources and not rely on the 
Cross Sound Cable to ``import'' the energy it needs. LIPA continues to 
explore the building of new generation and has added 600 MW of new 
generation over the last three years. LIPA remains committed to 
installation of new generation resource, including renewables. However, 
it bears noting that there are challenges to building new gas fired 
generation on Long Island, due to constraints in the supply of natural 
gas to the region. Ironically, the State of Connecticut has also 
stymied the development of a natural gas pipeline across Long Island 
Sound which would address this issue and bring needed supplies of 
natural gas to Long Island.
    Moreover, new generating facilities cannot be simply purchased off 
the shelf and installed overnight. LIPA has purchased mobile emergency 
generation for each of the last three summers in an effort to meet our 
load requirements. This demonstrates the dire situation that exists on 
Long Island. LIPA has moved as quickly as possible to secure new 
generation resources consistent with statutory and regulatory 
restrictions, its obligations for environmental protection and the 
needs of its consumers. In May and June of this year, the LIPA Board is 
expected to act on the results of several RFPs that will result in 
substantially more capacity over the next few years. Despite LIPA's 
best efforts, however, the reality is that LIPA is in functionally the 
same position as it has been over the few Summers. The Cross Sound 
Cable has been an important part of LIPA's resource plans. LIPA had 
planned and contracted for the Cable to meet the projected summer 2002 
load. Through the Cross Sound Cable, LIPA anticipated purchasing the 
output from among the new large and efficient generating facilities 
that have come on line in New England. Conversely, LIPA assumed that 
the Cable would be available as well to meet electric demand needs in 
the high growth transmission constrained area of Southwest Connecticut 
around New Haven.
    Despite our best efforts, it has not been possible to obtain 
sufficient generation or load reduction resources to meet the resources 
gap that DOE acknowledged in 2002. LIPA again faces the prospect of 
razor-thin reserves during heavy load conditions this summer because of 
the unavailability of the 330 MW Cross Sound Cable. As noted above, 
even with aggressive load reduction and conservation measures in place, 
the demand on Long Island continues to grow. Our planning and growth 
forecasts have been built on the availability of this essential 
transmission line and it is critical for the reliable service to the 
region. Any number of factors could severely affect the ability to meet 
demand on Long Island this summer. Our generation is aging and, in the 
summers of 2002 and 2003, we were fortunate to have 95% of the capacity 
available. However, historically, one can only rely on 90% of that 
generation--at most. Without the ability to use the Cross Sound Cable, 
the outage of one major generating unit could lead to blackout 
conditions. Weather is another unpredictable factor and if we were to 
have conditions similar to 1999, our peak load on Long Island will be 
13% higher than we are currently projecting. (Current projections for 
this summer are 4910 MW. Under conditions similar to 1999, our peak 
would be 5551 MW). Without the Cross Sound Cable, there are very thin 
margins for being able to meet our load without having to resort to 
load shedding.

                 EMERGENCY USE OF THE CROSS SOUND CABLE

    The Cross-Sound Cable has been able to provide significant support 
for the Connecticut and Long Island regions through the emergency 
orders issued by DOE. The summer of 2002 was consistently hotter than 
previous summers. In fact, LIPA experienced two all-time peaks in July 
2002. Faced with extreme demands on the system and Connecticut's 
prevention of commercial operations the Cross Sound Cable, LIPA took 
the initiative to request an emergency order from the Department of 
Energy under Section 202(c) of the Federal Power Act. The Secretary of 
Energy has been given authority, under Section 202(c) of the Federal 
Power Act, when an ``emergency exists by reason of a sudden increase in 
the demand for electric energy, or a shortage of electric energy or of 
facilities for the generation or transmission of electric energy,'' to 
``require by order such temporary connections of facilities and such 
generation, delivery, interchange, or transmission of electric energy 
as in its judgment will best meet the emergency and serve the public 
interest.'' The Department of Energy issued such order to energize the 
Cross-Sound Cable on August 16, 2002, allowing it to operate through 
October 1 (the end of the summer). Connecticut opposed that action.
    At the beginning of Summer 2003, the Cross Sound Cable again was 
rendered inactive due to the Connecticut moratorium and the Connecticut 
DEP's actions. However, on August 15, 2003, as a result of the evident 
emergency facing the Northeast due the Northeast blackout, LIPA 
received notice from the Department of Energy that Secretary Abraham, 
acting upon a request from New York's Governor George Pataki, had 
issued an emergency order immediately directing the operation of the 
Cross-Sound Cable pursuant to Section 202(c) of the Federal Power Act. 
Once active, the Cross Sound Cable provided essential electricity to 
Long Island and helped stabilize voltage on both Long Island and in 
Connecticut. The Cross Sound Cable transmitted 15,000 megawatt-hours of 
electricity over the critical three-day restoration period following 
August 14, enough to repower approximately 300,000 homes on Long 
Island.
    That order was, initially, of a two-week duration. However, on 
August 28th, the Secretary of Energy issued an order determining that 
emergency conditions continue to exist ``due to a shortage of electric 
energy, a shortage of facilities for the generation of electric energy, 
a shortage of facilities for the transmission of electric energy and 
other causes.'' Accordingly, the August 28th Order directed that the 
Cross Sound Cable remain energized to facilitate transfer of power 
between New York and New England (in both directions) and to provide 
voltage support and stabilization facilities.

                   THE NEED FOR THE CROSS SOUND CABLE

    The recent final report of the U.S.-Canada Task Force on the 
Blackout confirms the need for the Cross Sound Cable. The blackout 
report concludes that ``[r]eactive power problems were a significant 
factor in the August 14 outage, and they were also important elements 
in several of the earlier outages . . .'' During the August 14 
blackout, the Cross Sound Cable provided critical reactive power to 
Long Island and Connecticut to help stabilize the system.
    Moreover, it is incontrovertible that in the time since the August 
28 Order, an operational Cross-Sound Cable has helped ``prevent a 
breakdown in electric supply'' in a region where a shortage of 
transmission and generation facilities persists. The Cross Sound Cable 
is frequently called upon to provide critical reactive power voltage 
support in order to maintain operating voltages on the Connecticut 
transmission system at the request of the New England Independent 
System Operator. The Task Force Report highlights the importance of 
this service stating that ``Reactive power problems were a significant 
factor in the August 14 outage, and they were also important elements 
in several of the earlier outages . . .'' 2 It went on to 
recommend the strengthening of ``reactive power and voltage control 
practices in all NERC [North American Reliability Council] regions.'' 
3 The Cross Sound Cable is currently the only operating 
cable system in Connecticut and Long Island capable of providing 
dynamic reactive power support during sensitive energy demand periods.
---------------------------------------------------------------------------
    \2\ The Task Force Report at p. 160.
    \3\ Id.
---------------------------------------------------------------------------
    Since last August, the Cross Sound Cable has responded to 84 
requests from Connecticut to maintain a steady operating voltage and 8 
similar requests from New York. The cable has also responded 17 times 
to reduce system disturbances caused by lightening strikes, transformer 
failures, line faults, and unknown events. Nearly 80% of these 
disturbances were on the Connecticut grid. As vividly demonstrated by 
its reliable operation, the Cross Sound Cable not only provides 
important reliability benefits to Long Island residents, but also 
contributes directly to system reliability in Connecticut.
    The high voltage, direct current, Cross Sound Cable can provide 
valuable assistance in efforts to stem system disturbances similar to 
those that occurred last August 14th and that caused blacked outs in 
New York and on Long Island. Further, while we recognize the Cross 
Sound Cable's contribution to removing emergency conditions, the 
facility also should be placed into full commercial operation so it can 
fully support and enhance the reliability of the adjoining New England 
and New York control areas. LIPA's nearly 1.1 million customers 
(serving nearly three million people), as well as the customers of 
utilities in Connecticut benefit from the increased protection against 
contingencies and outages afforded by the Cross Sound Cable. As the 
August 28 Order noted, in the aftermath of the August 14th blackout, 
the Cross Sound Cable not only helped deliver substantial amounts of 
energy to Long Island, but also provided ``valuable voltage support and 
stabilization services for the electric transmission systems in both 
New England and New York.'' 4 These grid stabilization 
services not only helped the system in the region to recover from the 
blackout, but also prevented rolling blackouts in the aftermath of the 
restoration of service, and increased the overall reliability of the 
system.
---------------------------------------------------------------------------
    \4\ August 28 Order at second paragraph.
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    We are grateful for the efforts of the New York Congressional 
delegation and Governor Pataki. Legislation has been introduced in both 
the House and in the Senate designed to keep the Cross Sound Cable 
energized. LIPA strongly urges Congress to ensure the optimization and 
full utilization of existing regional transmission assets such as the 
Cross Sound Cable.
    Again, I thank the Committee for this opportunity to testify and 
for your interest in the Cross Sound Cable. LIPA looks forward to 
working with Chairman Hall and all members of this subcommittee on 
creating a solution that will enhance the reliability of our electric 
transmission and distribution systems and ensure the continued 
operation of the Cross Sound Cable.

    Mr. Hall. All right. Thank you very much Mr. Kessel.
    I would like to--I am kind of in a dilemma. Attorney 
general says this cable is illegal. Officials in Connecticut 
have determined that they are not going to authorize the use of 
the cable unless it is buried deeper in a few locations. Rock 
and other barriers are obstructing a deeper depth, I guess.
    However, right at that time, Mr. Kessel, when they hit the 
rock--I am building a swimming pool at home. I am repairing an 
old swimming pool, and I had to go redo it to go to city 
plumbing. I had to dig a ditch. I got the cheapest ditch digger 
I could get, and he dug a ditch as deep as he could get it, and 
it was not deep enough because he hit rock. I live in a place 
called Rock Wall, and there is a rock wall around the--rock 
wall around the city. Manmade or whatever, nobody has ever 
decided, but we hit rock. I had to get heavier equipment.
    Was there any heavier equipment that could have dug this to 
that depth and not have this dilemma of the rock that precluded 
that? Mr. Donahue.
    Mr. Donahue. I would like to answer that. Yes, if we knew 
the rock that was there----
    Mr. Hall. I am not criticizing that you didn't--apparently 
you didn't think----
    Mr. Donahue. There was equipment and technology that can 
dig through the rock. I would like to mention, too, we hear a 
lot about the rock, this rock, this rock that the Corps didn't 
know about either, by the way. And we have heard a lot about 
the expansion of the channel. There are ways to remove the 
rock. If we have to get our cable down and remove the rock, we 
will. It is about 4,000 square feet of area would have to be 
cleared.
    If in the future the Federal navigational channel is ever 
expanded, if it is, they are going to have to remove all the 
rock around us, over 130,000 square feet of rock, also in the 
future. We have agreed that if the channel is ever expanded, we 
will move the cable. There is technology out there. It will 
have to be used. If we have to lower our cable, it will have to 
be used if the channel is expanded.
    We think it is smart to leave the cable as is, whereas only 
have the environmental impact of doing that actually once. When 
and if the future channel is expanded----
    Mr. Hall. Well, so there could be more construction is what 
you are saying.
    Mr. Donahue. Oh, yeah. Yeah, absolutely.
    Mr. Hall. You get another situation here where the same 
officials from Connecticut have created a moratorium on the 
construction. So----
    Mr. Blumenthal. May I respond to that? Let me just explain 
about the moratorium. The moratorium dates from 2002, and it 
was adopted because of the plethora of lines, not just this 
cable, but literally a spaghetti of lines, pipelines for 
natural gas, cable lines for electricity, that were proposed. 
And what Connecticut said in effect was let's stop the 
construction so that we can plan intelligently.
    Mr. Hall. You all had that discussion.
    Mr. Blumenthal.  Now, the moratorium which has been 
extended to 2005 has a procedure which Cross-Sound could use to 
receive approval to go ahead. There is a waiver procedure. The 
moratorium is a red herring, if you will. A red herring, by the 
way, is not indigenous to the Sound. The dredge disposal issue 
is a red herring. I have said, and I will say again here, if it 
is illegal, I will fight it. That has been a matter of public 
record.
    Mr. Hall. You say it is illegal. Your statement was it is 
not legal.
    Mr. Blumenthal. No, we are talking about the dredge 
disposal that Mr. Kessel mentioned and----
    Mr. Hall. I understood you to say that the cable is not 
legal.
    Mr. Blumenthal. The cable is illegal in its present form.
    Mr. Hall. If it is illegal, it is not legal.
    Mr. Blumenthal. That is right.
    Mr. Hall. As the attorney for the State, what are you doing 
to make it legal?
    Mr. Blumenthal. Well, I can't make it legal, if you please, 
Mr. Chairman. With all due respect, they have----
    Mr. Hall. What of the moratorium? Does the moratorium 
preclude that?
    Mr. Blumenthal. No. The moratorium provides for an approval 
procedure, an application procedure that they may avail 
themselves to do, and it also would enable them to do, if they 
could do, what has to be done to make the cable legal, but only 
by blasting the bottom of the sound. And that is in violation 
of their permit conditions which they have accepted. And so the 
moratorium isn't the problem. It is their disregard for what 
they knew was at the bottom of the sound.
    The Army Corps of Engineers, contrary to what Mr. Donahue 
is saying, had indications and information about this ledge. 
There are memos in the Army Corps of Engineer's files, October 
2000, that indicate this ledge is a problem, that rock is at 
the bottom of the harbor.
    We are not dealing with some exotic remote part of the 
world that is unknown to us. New Haven Harbor has been well 
navigated and known for a long time, and the existence of a 
ledge there should have been no surprise through a substantial 
part of the harbor.
    Mr. Kessel. Mr. Chairman.
    Mr. Hall. Mr. Kessel.
    Mr. Kessel. I have to correct some things here. First of 
all, it just surprises me that the issue on the sludge issue, 
and it is not a red herring, it is a significant issue, it is 
not just a legal issue, it is an environmental issue. The 
Attorney General and others in Connecticut have used the 
environmental issue for years in objecting to the cable. And 
whether the sludge is dumping of sludge in the Long Island 
Sound is legal or not, what about the environment?
    You are the Attorney General that speaks up for the 
environment all the time, and I am frankly surprised that you 
won't stand up with the same veracity and strength that you 
have used against the Cross-Sound Cable to say that as a 
protector of the environment, that I am not going to sit idly 
by and allow that sludge to be dumped.
    Second of all--let me finish. And second of all, there is 
a--the moratorium. There were three moratoriums that were 
enacted. The last one was just recently enacted by the 
legislature this year. All of the moratoriums up to this year 
gave no opportunity for Cross-Sound Cable Transenergy to make 
those repairs. The current moratorium does allow for certain 
waivers and exceptions, but you have to go through such a 
gauntlet that it is highly unlikely that could ever occur. So 
while on the one hand the State of Connecticut says, you know, 
it is not buried to the depth requirement--by the way, in no 
areas of the Long Island Sound does that occur at all, in these 
seven or eight small areas, and so it is illegal. Transenergy 
cannot make the repairs even if they wanted to, because the 
moratorium brings it to a time where no work can be done in the 
Long Island Sound during the summer months.
    So for all intents and purposes, if we were to follow the 
Attorney General's reasoning here, we would not be able to use 
the Cross-Sound Cable until at the very least the summer of 
2006, and that just makes no sense to me. It is a Catch 22 of 
the highest order.
    Mr. Hall. I think my time is up. I recognize the gentleman 
from Virginia.
    Mr. Boucher. Well, thank you very much, Mr. Chairman. And I 
want to thank all of the witnesses for their informative and 
spirited testimony here this morning.
    Mr. Wood, I have several questions for you. You reference 
in your testimony that there is a class of cables that crosses 
the sound that have been in place for something on the order of 
30 years, and that there have been some problems in terms of 
perhaps anchors from barges contacting these cables with the 
release of chemicals that were a part of the cable. I think 
benzene perhaps was released. Do you know if this particular 
cable that we are discussing today, this Cross-Sound Cable, is 
potentially subject to that kind of problem?
    Mr. Wood. I don't know the engineering of it. I see the 
cross-section as you do, and it doesn't look like there is a 
liquid surrounder there, but I am not aware of the full 
influence of that cable.
    Mr. Boucher. Would other members of this panel care to 
comment just very briefly on this, because we have some other 
questions.
    Mr. Donahue. Thank you, sir. I will comment briefly. The 
1385 cable, as it is commonly known, the old cable, is using a 
technology that uses oil fluids to help cool the cable. The 
Cross-Sound Cable, as Mr. Kessel indicated, uses solid 
dielectric, solid plastic, so there is no oil on this cable.
    Second, the 1385 cable was not buried along its entire 
length, and in the areas where it was buried, it was only 
buried to a couple of feet. So it has experienced significant 
problems over the years.
    Mr. Boucher. Mr. Blumenthal, do you have a contrary opinion 
to that?
    Mr. Blumenthal. I do not. Our objection environmentally to 
this cable is based on its effect on the aquatic life and the 
ecosystems of the Sound, and on the fact that substantial 
blasting, detonation in the seabed of the Sound would be 
necessary to lay it at the proper depth.
    Mr. Boucher. So the experience with the 1385 cables is 
really not what gives rise to Connecticut's environmental 
concerns at this point.
    Mr. Blumenthal. It is not. In fact, on the contrary, sir, 
the State of Connecticut has favored upgrading the 1385 line to 
eliminate that problem so that there could be better 
transmission. And, in fact, the 345 kV line would assist in 
that transmission if necessary and appropriate from New York to 
Connecticut or vice versa.
    Mr. Boucher. Thank you very much.
    Mr. Wood, let me return to you. In your testimony you 
suggest that the Congress might want to consider a change in 
the Department of Energy's authorities under section 202 that 
currently enable the Department to order that certain 
facilities be operated in the event of an emergency. And your 
proposal, as I understand it, is that this DOE authority could 
be exercised not just in emergencies, but when it is deemed to 
be in the national interest to have certain facilities be 
operated. Is that a Commission position that are you adopting? 
Is that a formal recommendation you are making to us? Do you 
have legislation to recommend to us along those lines?
    Mr. Wood. It is my own recommendation in preparation for 
this hearing, and reviewing the Secretary's order, the 
limitations, as General Counsel Otis has pointed out, relate to 
a specific factual finding of an emergency, and while that is 
not defined, I think it is a significantly high standard that 
would not include issues such as general reliability, 
preparatory actions to take perhaps in advance of a high-
electricity useage summer. And so I think that the standards 
should be made a little bit broader so that the Secretary would 
have broader authority, but it is my own analysis of the 
situation, my experience with the Federal Power Act, not that 
of our Commission nor of the Secretary.
    Mr. Boucher. Thank you.
    Ms. Otis, does the Department of Energy have any comment on 
this proposal?
    Ms. Otis. Well, I feel as if I should at least return the 
favor. I guess what I would point the subcommittee to are the 
siting provisions in H.R. 6 currently, which actually would 
give this override authority to the FERC in circumstances--in 
appropriate circumstances, and I do think actually that the 
circumstance that we have here is a potential candidate for the 
use of that authority. Obviously no one would want to prejudge 
whether it would, in fact, be appropriate to use it here, but I 
think that this is a tool that might assist in resolving 
disputes like this.
    Mr. Boucher. Well, thank you very much. I will have to 
confess that in 22 years here, I have never seen two agencies 
try to hand each other authority quite the way that you have 
today. Typically it is the reverse of that. But thank you for 
your comments.
    Well, let me ask you this, Mr. Wood. If Congress were to 
adopt this recommendation and enable DOE to exercise this 
authority when it is deemed to be in the public interest and 
not necessarily in emergency situations, would I be correct in 
interpreting the proposal to say that DOE's authority would 
then be preemptive of both State and Federal environmental 
laws, and that the operation of the facility could go forward 
if DOE orders it, even though the Army Corps of Engineers, for 
example, had found that permit conditions had not been met?
    Mr. Wood. I think that the standard and the public interest 
would have to govern, and I think that would be up to the 
Secretary and/or the Commission, whoever has that authority, to 
balance those very important determinations as to whether the 
public interest requires those State and Federal environmental 
laws to be overridden.
    Mr. Boucher. Okay. Thank you.
    One final question of you. I wonder if the operation of 
this cable falls under the reliability guidelines that have 
been published by the North American Reliability Council.
    Mr. Wood. Are they subject to the----
    Mr. Boucher. Are they subject to the reliability guidelines 
published by NERC?
    Mr. Wood. They should be. I think Mr. Museler might be 
probably a better person to handle that one.
    Mr. Boucher. Mr. Museler.
    Mr. Museler. Yes, sir, they would be, and they are in the--
on the New York side that cable is--was included in the 
reliability analysis for the summer of 2004 in accordance with 
those guidelines, and I believe the same is true of the New 
England Independent System Operator.
    Mr. Boucher. Under current law those guidelines are 
voluntary. They are not enforceable. We have provisions in H.R. 
6 that would make these guidelines of a mandatory nature, and 
enforceable.
    Mr. Wood, let me ask you this. Do you believe that in order 
to enhance system reliability--and I believe you have said that 
the operation of this particular cable would, in fact, enhance 
transmission reliability--do you think it would be appropriate 
for the Congress to enact freestanding, at this point, 
legislation that would subject this particular cable to the 
reliability standards published by the NERC?
    Mr. Wood. I think in light of what I heard this morning, 
H.R. 6, isn't dead and buried. It sounds like it has come back 
to life. So I would say no.
    Mr. Boucher. I think that might be an optimistic view.
    Mr. Wood. Well, I sat here and listened. Maybe I am a bit 
naive, but there is so much in that bill, as you know, and I 
testified to that last week when we talked about the Alaska 
natural gas pipeline, one of the other kind of tier 1 issues 
for me, that really it is just more than making something 
mandatory. It is a whole panoply of issues that relate to the 
energy picture. So I would hope that the Congress and 
particularly the other Chamber could get the full package out 
like the House did.
    Mr. Boucher. Let me ask you just a broader question 
finally. Let's suppose we get to September, and the situation 
is unchanged with H.R. 6. We don't see any real forward 
movement. The agreement on a special fund for MTBE programs has 
not come together, and it really looks like H.R. 6 is going to 
die for this Congress. Would you, at that point, think that we 
would be well advised to pass on a freestanding basis that 
provision of H.R. 6 that would make the NERC rules both 
mandatory and enforceable?
    Mr. Wood. This is uncharacteristic for me, but can you ask 
me then. If indeed it is dead, ask me then.
     Mr. Boucher. Ask you then, if it is dead. We will give you 
5 months to consider your answer. That is fine.
    Well, thank you all very much, and, Mr. Chairman, thank 
you.
    Mr. Hall. Yes. I think because we have no other members, 
they have gone to other meetings, and we--without objection, we 
will have the right to submit questions to you in writing and 
ask that you answer them within 2 weeks, if you can, of the 
time you receive them, and they will go into the record here.
    And all of you are very important. You are very important 
to the people that you report to. Your time here is important. 
The time you took to prepare for this is important, and we 
recognize we have one terrific panel here.
    And, Pat, we will have you back on Oil for Food on Iraq 
probably next week, so don't get too comfortable over there, 
wherever you are. But thank you for your contribution to this 
subcommittee, to this Congress and to the Nation. Thank you 
very much.
    [Whereupon, at 12:10 p.m., the subcommittee was adjourned.]
    [Additional material submitted for the record follows:]

Prepared Statement of Hon. Hillary Rodham Clinton, a U.S. Senator from 
                         the State of New York

    I want to thank Chairman Hall and Ranking Member Boucher for 
holding this hearing on an issue of importance to the people of New 
York. Today's hearing will provide an opportunity for everyone to 
provide their perspective on what I believe has become an unnecessarily 
controversial issue.
    It is my hope that an airing of the facts at today's hearing will 
propel us towards what I believe to be the only sensible outcome--
reenergizing the Cross Sound Cable.
    As everyone knows, the Secretary of Energy, Spencer Abraham, issued 
an order on May 7 that resulted in the shutdown of the cable on May 19.
    I believe this decision is shortsighted, and I am extremely 
concerned that it will put Long Island at risk of power failures as we 
enter the summer peak demand months.
    The Cross Sound Cable has provided proven reliability benefits at a 
time when a shortage of generation and transmission facilities 
continues to exist on Long Island and in Southern New England. The 
Cross Sound Cable transmitted 300 MW of power over the Blackout 
weekend, enough to turn on the power in about 300,000 homes on Long 
Island. Since beginning full-time operation on September 1, 2003, the 
Cross Sound Cable has transmitted nearly one half million megawatt-
hours of electricity to help provide sufficient power to prevent more 
blackouts or brownouts on the island.
    Additionally, the extra power from the Cable makes more power 
available on Long Island to export over another submarine cable into 
Southwestern Connecticut when needed, thereby making the regional power 
grid more resilient. The independent grid operators have successfully 
tested sending power over the Cross Sound Cable to Long Island and then 
simultaneously sending power from Western Long Island over another 
submarine cable to Southwest Connecticut. During a severe cold spell in 
January, Long Island Power Authority was prepared to send 200 megawatts 
of power over Cross Sound Cable to help Connecticut if needed. Over the 
short to long-term, the Cable thus allows excess New York-generated 
power to be transmitted to Connecticut to help prevent blackouts and 
brownouts.
    The cable also provided voltage support for Connecticut when it was 
operating. In fact, ISO New England, the independent operator of the 
New England transmission system, made 108 requests to the Cross Sound 
Cable for help maintaining a steady operating voltage on the 
Connecticut side during the period when the cable was on.
    So it is clear that the Cross Sound Cable helps both Long Island 
and Connecticut.
    But so far, Connecticut has blocked the cable. Environmental 
impacts are cited as a major factor in Connecticut's opposition. But 
the fact is that studies of the cable have concluded that it has 
minimal impacts. The most recent study was conducted last winter while 
the cable was on. It showed that there were not lasting impacts from 
when the cable was put in place. And it also showed that operation of 
the cable did not have any significant environmental impact. So while I 
take the issue seriously, I just don't think there's much there.
    What I find particularly puzzling about this issue is that 
Connecticut has put the Cross Sound Cable in a bureaucratic bind. 
Everyone acknowledges that the cable is not currently buried to the 
depth required in its permits in seven places. That is the basis for 
Connecticut's charge that the cable is illegal. But at the same time, 
Connecticut has denied requests from the owners of the Cross Sound 
Cable to allow them to bury the cable to the proper depth. It hardly 
seems fair that the company is willing to fix the problem, and 
Connecticut won't allow them to do it.
    And it's hurting New Yorkers. That's why I have introduced 
legislation in the Senate that would turn the cable back on, and 
Congressman Bishop has introduced that legislation in the House. I hope 
that after this hearing, we will be able to move that bill or find some 
other way to make progress on this issue.

                                 ______
                                 
   Prepared Statement of Hon. Gary L. Ackerman, a Representative in 
                  Congress from the State of New York

    Good morning Chairman Hall, Ranking Member Boucher, Members of the 
Subcommittee on Energy and Air Quality. Thank you for holding a hearing 
on this important topic, and allowing me to express my strong support 
for the Cross Sound Cable. The operation of this cable is imperative to 
provide energy security and reliability to the Northeast.
    In the wake of the August 14th blackout, we have discovered that 
our electricity transmission system is not as reliable as we once 
believed. The Cross Sound Cable provides reliability benefits to both 
New York and Connecticut. The cable can allow for electricity to flow 
in either direction and has been an important tool in stabilizing the 
region's energy grid. Since it was activated on August 28th, it has 
been utilized over 100 times to provide stabilization for the electric 
transmission systems in both states.
    The decision to shut down the Cross Sound Cable reduces the supply 
of electricity to Long Island just as energy prices and the 
thermometers are spiking.
    The State of Connecticut is opposing the operation of the line 
based on environmental concerns. However, as a result of Secretary 
Abraham's emergency order to activate the cable, we have seen that the 
operation of the cable has caused no adverse environmental impacts. In 
addition, Connecticut opposes operation of the cable because it does 
not comply with the permit issued by the Army Corps of Engineers. 
However, the State of Connecticut refuses to allow repairs to be made 
to ensure compliance or to grant a waiver for the project.
    The Secretary of Energy has stated that he will re-energize the 
cable in the event of an emergency. I am sorry to say that will be too 
little, too late. The idea that the cable should lay dormant until an 
emergency occurs, when the operation of the cable may be able to 
prevent an emergency, is shortsighted and dangerous. New York suffered 
serious economic losses from the last summer's blackout and our region 
cannot afford another power failure.
    I would like to thank the Subcommittee for its work on this 
important subject and encourage action on this issue before the lights 
go out . . . again.

                                 ______
                                 
 Prepared Statement of Hon. Rob Simmons, a Representative in Congress 
                     from the State of Connecticut

    Mr. Chairman, Mr. Boucher, and other members of the Committee, 
thank you for holding this hearing, and for allowing members from 
Connecticut to testify on behalf of our home state. This is an issue of 
great importance to our state.
    Mr. Chairman, the 24-mile Cross Sound Cable, operated by Islander 
East, LLC, extends between New Haven, Connecticut and the former 
Shoreham nuclear power plant on eastern Long Island, New York. The 
cable has been a contentious issue in Connecticut for several years 
beginning with its application to the Connecticut Siting Council.
    Connecticut is home to four nuclear power plants--two 
decommissioned and two operating--as well as numerous coal, gas and 
electric plants. Connecticut has taken many of the necessary steps to 
diversify its fuel mix in an effort to provide the resources necessary 
to try to meet our demand.
    That said, there is certainly room for improvement to our system. 
Southwest Connecticut is in need of an upgrade to its transmission 
system, as its demand often exceeds supply. Unfortunately the Cross 
Sound Cable, while delivering energy to Long Island, does nothing to 
help with the congestion facing Southwest Connecticut. To add insult to 
injury, the cable was laid improperly and as a result does not meet the 
depth requirements set by the Connecticut Department of Environmental 
Protection.
    Recognizing the Sound is a treasure to residents of both 
Connecticut and New York, the members of the Connecticut delegation 
voiced environmental concerns with respect to the laying of the cable 
throughout the permitting process. These concerns included the heat 
emitted from the cable, the electromagnetic field it generates and the 
disturbing of the sediments contaminated by chemicals and industrial 
waste. We continue to harbor these concerns today, in addition to those 
associated with the impact of the cable's failure to meet depth 
requirements.
    U.S. Secretary of Energy, Spence Abraham, energized the cable 
following the blackout last August that plunged thousands into the 
dark. The order to energize a cable that did not meet Connecticut 
permitting requirements overrode a decision by the state--effectively 
wrestling legal authority from Connecticut.
    The cable remained energized until last week when the Secretary 
issued a finding that it would have no impact on preventing another 
blackout. Sadly, the good news was short-lived, and now we are holding 
this hearing and fighting legislation intended to activate the cable 
indefinitely.
    Mr. Chairman, we have a serious situation. Energizing the Cross 
Sound Cable undermines the sovereignty of the State of Connecticut. As 
elected representatives, we have a duty to protect our citizens and the 
environment in which they live and rely on for their livelihood. The 
right of the state must be considered in this process.
    Thank you for considering my statement. I look forward to working 
with you on this issue.

                                 ______
                                 
   Prepared Statement of Hon. Carolyn McCarthy, a Representative in 
                  Congress from the State of New York

    Mr. Chairman, I welcome this opportunity to offer my testimony on 
an issue that is critically important to Long Island: the cross-Sound 
cable. I am in strong opposition to Secretary Abraham's decision to 
shut down the operation of the cross-Sound cable and I would urge you 
to allow permanent use of the cable.
    The loss of the cable, and the 330 megawatts of power that it 
carries, will have severe economic consequences for our region. In 
addition, without the use of the cable our power on Long Island is 
simply less dependable.
    Power companies are already moving to purchase replacement power 
and have said that the loss of the cable will result in as much as $38 
million dollars in additional costs this year. Most of these new costs 
will be passed onto consumers. On the Island we already have close to 
the highest electric prices in the country. With two-dollar gallons of 
gas and four-dollar gallons of milk, how can we ask Long Islanders to 
shell out even more cash for rising electricity rates? Long Islanders 
simply cannot afford this extra cost.
    Summer is approaching and this is peak usage season for 
electricity. Without the use of the cross-Sound cable Long Island power 
companies will be short critical amounts of power. The loss of the 
cable will eliminate the flexibility power companies need to respond to 
the increase in usage during the summer months or during an emergency. 
This could result in many power outages and brownouts across Long 
Island this summer as well as a slower response times if an emergency 
should occur. This cable is insurance and a type of safety valve when 
it comes to dependable and reliable power on Long Island.
    The Dept of Energy has said it was not able to conclude that the 
blackout, which hit the northeast, would have been prevented on Long 
Island if the cable were open and running. That may or may not be the 
case, but what we DO know is that keeping the cable open permanently 
will certainly prevent other types of blackouts, as well as help 
prevent sharp spikes in energy prices that will occur should this cable 
stay off. After living through last summer's blackout why would anyone 
want to make it harder for any region in the country to get power when 
it's needed?
    Connecticut authorities have argued that the cable causes 
environmental damage. This is simply not the case. The truth of the 
matter is--when the cable line was built it caused minor and temporary 
damage to shellfish habitat. Today the damage has naturally been 
repaired and the actual running of the cable does not cause any type of 
environmental damage. The State and jurisdictional agencies involved 
with this issue have determined that the use of this cable will not 
have any adverse environmental impact.
    Environmental groups on Long Island are not exactly silent when 
they see something harmful being done to the environment and yet no 
group has come out against the use of this cable. However, 
environmental groups have spoken out against the EPA's proposed dredge 
spoils dumping in the Long Island Sound, which Connecticut supports. 
These dredge spoils will create an ecological hazard far worse than any 
threat from the cable and if Connecticut officials truly cared about 
the environment or the health of the Sound then they would be against 
this dredge dumping proposal.
    Another argument of Connecticut authorities against the use of this 
cable is that the it presents a navigational hazard because it is not 
buried deep enough at seven locations. The reason for this is that when 
the cable was being laid it was found that in some places, going a few 
feet deeper would cause environmental damage. There has not been one 
cited navigational problem from these few areas where it is a small 
number of feet short of being buried to regulation. Connecticut 
officials are demanding the cable be idle until those areas are buried 
deep enough but they have banned repairs that would make the cable meet 
the requirements.
    I urge quick and immediate action to keep the cross-Sound cable 
open permanently so that every time there is an emergency or depletion 
in supply we do not have to wait for a bureaucratic process to pan out 
before we see relief. Allowing a perfectly good cable to lie on the 
bottom of the Long Island Sound unused is absolutely preposterous when 
it could greatly benefit many people in our region. Long Islanders 
deserve reliable energy at reasonable prices and allowing the permanent 
opening of this cable will provide this.
    Thank you, Mr. Chairman for holding this hearing today and for 
giving me the opportunity to submit testimony.

                                 ______
                                 
  Prepared Statement of Eliot Spitzer, New York State Attorney General

    It is now nine months since the August, 2003 blackout demonstrated 
the vulnerability of the Northeast's electric grid. As thermometers 
throughout the Northeast begin to move past the 80 degree mark, last 
summer's outage is on all of our minds.
    For decades, the nation's power generators, high voltage bulk 
transmission lines and distribution systems have been cobbled together 
into a patchwork network. The August 2003 blackout revealed that the 
electric grid is fragile at its seams. It also showed us the vast 
number of people and businesses who rely upon the system--within New 
York's borders, throughout the Northeast and across the border in 
Canada. It highlighted our responsibility to strengthen the grid, to 
ensure that we do not have another massive power outage.
    To that end, I support continued operation of the Cross Sound cable 
between Long Island and Connecticut.
    In order to prevent future outages, on August 28, 2003, the 
Secretary of Energy appropriately and lawfully ordered the cable into 
operation. To strengthen the electric grid immediately, the Secretary 
should order the continued operation of the cable.
the continuing vulnerability of the bulk power transmission grid is an 

         EMERGENCY REQUIRING ACTION BY THE SECRETARY OF ENERGY

    Electricity is supplied in North America through large 
interconnected networks, extending in a grid across the United States 
and Canada. This grid is not only more efficient than independent 
generator-consumer transmission systems, but is also generally more 
stable and reliable, since the system as a whole can absorb 
disturbances that would otherwise cause local power outages. The sina 
qua non of the grid's functioning, however, is adequate transmission 
capacity.
    Because the Cross Sound cable is one of only six power links 
connecting Long Island to the mainland, it is critical to ensure 
adequate transmission capacity and reliable power on Long Island. 
Sufficient power supply is important not only for the well-being of 
Long Island residents, but, since the effects of severe local deficits 
ripple through the network, for the region as a whole. An 
interconnected system can spread the effects of disturbances over a 
wide area, quickly restoring balance in the region where the problem 
originates without compromising the system as a whole. This can only 
work, however, when there is sufficient transmission capacity.
    The August 14, 2003, blackout is illustrative. The Report of the 
U.S.-Canada Power System Outage Task Force emphasizes the importance of 
transmission capacity in explaining why that blackout did not cascade 
further. ``Higher voltage lines and more densely networked lines . . . 
are better able to absorb voltage and current swings and thus serve as 
a barrier to the spreading of a cascade. As seen in the [August 14, 
2003 blackout . . . where] . . . there were fewer lines, each absorbed 
more of the power and voltage surges and was more vulnerable to 
tripping.1
---------------------------------------------------------------------------
    \1\ Final Report on the August 14, 2003 Blackout in the United 
States and Canada: Causes and Recommendations at 75-77.
---------------------------------------------------------------------------
    Of course, no two power crises are exactly alike. We do not know 
whether there will be a repeat of last summer's cascading blackout, 
much less when or where a transformer might fail, a line might short or 
lightening might strike. As the Wall Street Journal summarized, the 
Task Force's Final Report ``offers little reason to believe the 
electric system is hardier today'' than it was on August 13, 
2003.2 Given that the grid is not demonstrably more robust 
than it was on August 14, 2003, we must do what we can to ensure that 
this summer does not bring another massive blackout. Maintaining the 
operation of the Cross Sound cable provides a means of mitigating the 
risk of another such outage.
---------------------------------------------------------------------------
    \2\ Rebecca Smith, ``Blackout Could Have Been Avoided,'' The Wall 
Street Journal, April 6, 2004, at A6; see also Rebecca Smith, ``Faults 
Still Plague Electric System as Peak Summertime Use Nears,'' The Wall 
Street Journal, April 13, 2004, at A1 (``As the summer months approach, 
North America's electricity system remains frail and many of the 
shortcomings that contributed to a massive failure eight months ago 
have yet to be fixed.'')
---------------------------------------------------------------------------
THE SECRETARY OF ENERGY HAS THE AUTHORITY TO ORDER CONTINUED OPERATION 
                              OF THE CABLE

    The Secretary's authority under the Power Act applies both when the 
emergency is an immediate threat to the power supply and where the 
power supply is in an extended period of insufficiency. Clearly, such 
an insufficiency exists. Our electric transmission grid is as 
vulnerable to another such crisis as it was on August 14, 2003. This 
vulnerability constitutes an emergency from which the grid will not be 
relieved until the causes are rectified, and the only way to accomplish 
this is through the addition of robust transmission capacity.
    The Federal Power Act authorizes the Secretary of Energy to act to 
protect the power supply during an emergency threatening or disrupting 
the adequate operation of the electric grid.3 The Act also 
transferred to the Secretary the authority previously vested in the 
Federal Power [now Federal Energy Regulatory] Commission 4 
by  824a(c), which provides in pertinent part, ``whenever the 
Commission determines that an emergency exits . . . the Commission 
shall have authority . . . to require by order such temporary 
connection of facilities and such generation, delivery, interchange, or 
transmission of electric energy as in its judgment will best meet the 
emergency and serve the public interest.'' 5
---------------------------------------------------------------------------
    \3\ Id.
    \4\ 42 U.S.C.A.  7151(b).
    \5\ 16 U.S.C.A.  824a(c).
---------------------------------------------------------------------------
    The Department of Energy regulations implementing  824a(c) set out 
several definitions of ``emergency,'' among them ``extended periods of 
insufficient power supply'' or ``a regulatory action which prohibits 
the use of certain electric power supply facilities.'' 6 
Given the fragile nature of the Northeastern electric transmission grid 
and the regulatory obstacles that are keeping the Cross Sound cable 
from operating, the Secretary of Energy clearly has authority to apply 
 824a(c) to order the cable into operation. Moreover, the 
environmental issues raised in connection with the operation of the 
cable are without merit.
---------------------------------------------------------------------------
    \6\ 10 C.F.R.  205.371.
---------------------------------------------------------------------------
    On August 14, 2003, the Cross Sound cable had been physically 
complete for over a year but was not in operation due to permitting 
issues. Within hours of the August 2003 blackout, the Honorable Spencer 
Abraham, United States Secretary of Energy, ordered the immediate 
activation of the cable to alleviate the power supply emergency in both 
New York and Connecticut. While the original order was scheduled to 
expire on August 31, 2003, on August 28, 2003, Secretary Abraham again 
invoked his authority and directed that the Cross Sound cable continue 
operating until the he makes a formal determination that the current 
emergency has passed.
    Just a week and a half ago, on May 7, 2004, citing the findings in 
the U.S.-Canada Power System Outage Task Force Report, Secretary 
Abraham allowed the Cross Sound cable to be shut down.7 I do 
not agree with this outcome.
---------------------------------------------------------------------------
    \7\ Department of Energy Order No. 202-03-4, May 7, 2004.
---------------------------------------------------------------------------
    While, as the Secretary of Energy stated in his May 7 order, the 
Task Force Report did not ``identify any particular role that the Cross 
Sound Cable would have played in stopping the spread of the outage,'' 
the Report also did not identify any reason to believe that the grid is 
any less vulnerable than it was last August.8 This 
continuing vulnerability of the Northeast's transmission grid to 
disruptions and even blackouts is an emergency that the Secretary of 
Energy may and should address under the Federal Power Act.9
---------------------------------------------------------------------------
    \8\ Id.
    \9\ 16 U.S.C.A.  824a(c).
---------------------------------------------------------------------------
                               CONCLUSION

    In the words of the Connecticut Siting Council, operation of the 
Cross Sound cable can be expected to ``enhance the inter-regional 
electric transmission infrastructure . . . [and] improve the 
reliability and efficiencies of [the interconnected] systems by 
providing generation resources that can be drawn upon in the event of 
changes in electricity demand or supply.'' 10 The system 
degradation that results from even temporarily blocking the flow of 
electricity through the Cross Sound cable is a substantial harm to the 
people of New York and the Northeast and is contrary to the public 
interest.
---------------------------------------------------------------------------
    \10\ Cross-Sound Cable Company, LLC application for a Certificate 
of Environmental Compatibility and Public Need, Docket No. 208 
(Connecticut Siting Council, January 3, 2002), available at http://
www.ct.gov/csc/ lib/csc/Fof208.doc.
---------------------------------------------------------------------------
    Congress should act quickly to ensure that the Secretary of Energy 
orders the Cross Sound cable back into operation.

                                 
